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From a review of the information above identify the areas which you would concentrate on in your analysis of the postion of Bepler ltd.

From a review of the information above identify the areas which you would concentrate on in your analysis of the postion of Bepler ltd.

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter9: Metric-analysis Of Financial Statements
Section: Chapter Questions
Problem 9.4.13P: Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of...
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From a review of the information above identify the areas which you would concentrate on in your analysis of the postion of Bepler ltd.

2. Given below are the summarized accounts of Belper Ltd for the past five years. These form the basis for the questions which follow 19X7 19X8 19X6 Summarized profit and loss accounts of Belper Ltd 19X5 £000 £000 19X4 £000 £000 278,340 372,753 259,470 116,232 346,695 244,809 230,334 101,673 26,058 33,531 29,136 Sales Cost of sales Trading profit 14,559 8,151 4,065 3,678 1,380 14,082 10,167 7,707 Depreciation 2,652 19,299 3,825 17,751 Interest 10,527 2,601 7,833 Net profit before tax 9,270 1,746 11,466 1,224 Taxation 8,481 8,781 489 Net profit after tax 4,989 (15) (870) Extraordinary items 1,713 16,455 8,466 7,911 5,913 3,738 3,339 3,672 1,812 801 -1,959 12,717 Dividends Retained profits 5,127 6,099 5,112 30,975 50,427 25,848 Retained at start of year 19,749 14,637 43,692 48,468 30,975 Retained at end of year 25,848 19,749 Notes (During 19X8 some of the freehold properties were revalued. (i) Loans amounting to £22 million were repaid during the year. (i) The extraordinary item shown in the profit and loss account in 19X8 represents the damages received by the company from a libel action against a newspaper. (iv) No fixed assets were disposed of during the year. Summarized balance sheets of Belper Ltd 19X4 19X5 19X6 19X7 Fixed assets £000 £000 19X8 £000 £000 £000 Freehold land and buildings 14,058 14,571 20,559 20,598 29,721 Leasehold land and buildings 2,349 2,490 5,184 Plant and machinery 5,193 12,564 8,082 11,541 26,781 Total gross fixed assets 30,000 47,172 24,489 28,602 52,524 55,791 89,457 Depreciation freehold Depreciation leasehold 117 597 147 345 774 Depreciation plant, etc. Total depreciation 4,197 858 5,325 8,259 4,314 11,277 18,747 Net fixed assets 5,472 8,604 20,175 12,051 20,202 23,130 43,920 Intangible fixed assets 43,740 69,255 Goodwill Investments 789 807 849 Patents and trade marks 486 795 936 936 393 Current assets 3,972 3,618 303 393 6,063 Stock 8,730 9,345 20,031 23,034 53,091 74,823 99,606 Financial statement analysis £000 93,930 81,750 12,180 1,023 2,727 8,430 2,517 5,913
Transcribed Image Text:2. Given below are the summarized accounts of Belper Ltd for the past five years. These form the basis for the questions which follow 19X7 19X8 19X6 Summarized profit and loss accounts of Belper Ltd 19X5 £000 £000 19X4 £000 £000 278,340 372,753 259,470 116,232 346,695 244,809 230,334 101,673 26,058 33,531 29,136 Sales Cost of sales Trading profit 14,559 8,151 4,065 3,678 1,380 14,082 10,167 7,707 Depreciation 2,652 19,299 3,825 17,751 Interest 10,527 2,601 7,833 Net profit before tax 9,270 1,746 11,466 1,224 Taxation 8,481 8,781 489 Net profit after tax 4,989 (15) (870) Extraordinary items 1,713 16,455 8,466 7,911 5,913 3,738 3,339 3,672 1,812 801 -1,959 12,717 Dividends Retained profits 5,127 6,099 5,112 30,975 50,427 25,848 Retained at start of year 19,749 14,637 43,692 48,468 30,975 Retained at end of year 25,848 19,749 Notes (During 19X8 some of the freehold properties were revalued. (i) Loans amounting to £22 million were repaid during the year. (i) The extraordinary item shown in the profit and loss account in 19X8 represents the damages received by the company from a libel action against a newspaper. (iv) No fixed assets were disposed of during the year. Summarized balance sheets of Belper Ltd 19X4 19X5 19X6 19X7 Fixed assets £000 £000 19X8 £000 £000 £000 Freehold land and buildings 14,058 14,571 20,559 20,598 29,721 Leasehold land and buildings 2,349 2,490 5,184 Plant and machinery 5,193 12,564 8,082 11,541 26,781 Total gross fixed assets 30,000 47,172 24,489 28,602 52,524 55,791 89,457 Depreciation freehold Depreciation leasehold 117 597 147 345 774 Depreciation plant, etc. Total depreciation 4,197 858 5,325 8,259 4,314 11,277 18,747 Net fixed assets 5,472 8,604 20,175 12,051 20,202 23,130 43,920 Intangible fixed assets 43,740 69,255 Goodwill Investments 789 807 849 Patents and trade marks 486 795 936 936 393 Current assets 3,972 3,618 303 393 6,063 Stock 8,730 9,345 20,031 23,034 53,091 74,823 99,606 Financial statement analysis £000 93,930 81,750 12,180 1,023 2,727 8,430 2,517 5,913
19X4 19X5 19X6 19X7 19X8 17,589 24,693 60,270 Debtors Bank and cash 48,987 66,768 4,698 6,801 7,839 3,273 9,747 42,318 54,528 121,200 127,083 176,121 Current liabilities Creditors 16,197 24,588 55,659 41,130 72,831 Taxation 459 768 4,302 2,712 3,444 Dividends 801 1,812 3,339 3,738 3,672 Bank loans and overdraft 10,581 4,026 18,180 29,316 37,638 28,038 31,194 81,480 76,896 117,585 Net current assets 14,280 23,334 39,720 50,187 58,536 39,702 51,684 90,945 103,896 138,465 Financed by Ordinary share capital 2,229 2,829 3,396 6,792 7,077 Share premium account Retained profits 2,931 7,530 14,598 11,247 12,387 19,749 25,848 30,975 50,427 48,468 Revaluation reserves 6,735 6,735 9,423 Total equity and reserves Loans 24,909 36,207 55,704 75,201 77,355 14,793 15,477 35,241 28,695 61,110 51,684 90,945 103,896 138,465 39,702 (a) From a review of the information above identify the areas which you would concentrate on in your analysis of the position of Belper Ltd. (b) Produce common size profit and loss accounts for the five years and analyse these state- ments with particular reference to the profitability of Belper. (c) Calculate the trends in the Sales and Cost of sales and comment on the information disclosed by your analysis. (d) Using whatever form of analysis you consider appropriate comment on the financial risk profile of Belper Ltd for the five years under review. e) Based on your analysis write a brief report for the bank advising them on whether to continue to provide finance for Belper Ltd. f) Apart from the information arising from your analysis what other information would you advise the bank to consider when making its decision? g) Discuss how your analysis would have been altered if you were carrying out the analysis on behalf of a prospective shareholder.
Transcribed Image Text:19X4 19X5 19X6 19X7 19X8 17,589 24,693 60,270 Debtors Bank and cash 48,987 66,768 4,698 6,801 7,839 3,273 9,747 42,318 54,528 121,200 127,083 176,121 Current liabilities Creditors 16,197 24,588 55,659 41,130 72,831 Taxation 459 768 4,302 2,712 3,444 Dividends 801 1,812 3,339 3,738 3,672 Bank loans and overdraft 10,581 4,026 18,180 29,316 37,638 28,038 31,194 81,480 76,896 117,585 Net current assets 14,280 23,334 39,720 50,187 58,536 39,702 51,684 90,945 103,896 138,465 Financed by Ordinary share capital 2,229 2,829 3,396 6,792 7,077 Share premium account Retained profits 2,931 7,530 14,598 11,247 12,387 19,749 25,848 30,975 50,427 48,468 Revaluation reserves 6,735 6,735 9,423 Total equity and reserves Loans 24,909 36,207 55,704 75,201 77,355 14,793 15,477 35,241 28,695 61,110 51,684 90,945 103,896 138,465 39,702 (a) From a review of the information above identify the areas which you would concentrate on in your analysis of the position of Belper Ltd. (b) Produce common size profit and loss accounts for the five years and analyse these state- ments with particular reference to the profitability of Belper. (c) Calculate the trends in the Sales and Cost of sales and comment on the information disclosed by your analysis. (d) Using whatever form of analysis you consider appropriate comment on the financial risk profile of Belper Ltd for the five years under review. e) Based on your analysis write a brief report for the bank advising them on whether to continue to provide finance for Belper Ltd. f) Apart from the information arising from your analysis what other information would you advise the bank to consider when making its decision? g) Discuss how your analysis would have been altered if you were carrying out the analysis on behalf of a prospective shareholder.
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