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Statement of Financial Position as at 31 December 2018 Assets 2018 2017 GHS GHS Non-current assets Property, plant and equipment 802,180 656,071 Current assets 64,422 905,679 Inventory 86,550 Trade receivables 807,712 Prepayment and accrued income Cash at bank and in hand 97,022 45,729 1,327 1,068,450 1,008,354 68,363 Total assets 1,870,630 1,664,425_ Equity and liabilities Equity Ordinary shares 258,178 258,178 651,721 909,899 410,591 668,769 Income surplus Non-current liabilities 10% loan stock 100,000 100,000 Current liabilities 627,018 81,279 545,340 280,464 Trade payables Accruals and deferred income Corporate taxes Other taxes 108,000 37,200 44,434 860,731 1,870,630 1,664,425 32,652 895,656 Total equity and liabilities Required: a. Calculate the following ratios: i. Profitability ratios - Return on Capital Employed, Return on Equity, Gross profit margin and Net profit margin ii. Long term solvency and stability - DebtU/Asset ratio, Gearing ratio and Interest cover iii. Short-term solvency and liquidity – Current ratio and Acid test ratio iv. Efficiency (turnover ratios) – Account receivable collection period, Account payable payment period, Inventory turnover (times) b. Prepare a report addressed to the Chief Executive Officer, assessing the relative performance and financial position of Glory Ltd for the year ended 31" December, 2018

Statement of Financial Position as at 31 December 2018 Assets 2018 2017 GHS GHS Non-current assets Property, plant and equipment 802,180 656,071 Current assets 64,422 905,679 Inventory 86,550 Trade receivables 807,712 Prepayment and accrued income Cash at bank and in hand 97,022 45,729 1,327 1,068,450 1,008,354 68,363 Total assets 1,870,630 1,664,425_ Equity and liabilities Equity Ordinary shares 258,178 258,178 651,721 909,899 410,591 668,769 Income surplus Non-current liabilities 10% loan stock 100,000 100,000 Current liabilities 627,018 81,279 545,340 280,464 Trade payables Accruals and deferred income Corporate taxes Other taxes 108,000 37,200 44,434 860,731 1,870,630 1,664,425 32,652 895,656 Total equity and liabilities Required: a. Calculate the following ratios: i. Profitability ratios - Return on Capital Employed, Return on Equity, Gross profit margin and Net profit margin ii. Long term solvency and stability - DebtU/Asset ratio, Gearing ratio and Interest cover iii. Short-term solvency and liquidity – Current ratio and Acid test ratio iv. Efficiency (turnover ratios) – Account receivable collection period, Account payable payment period, Inventory turnover (times) b. Prepare a report addressed to the Chief Executive Officer, assessing the relative performance and financial position of Glory Ltd for the year ended 31" December, 2018

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 89E: Ratio Analysis Rising Stars Academy provided the following information on its 2019 balance sheet and...
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You are a consultant for Glory Ltd, a quoted company operating in the manufacturing sector. Following are a Statement of Profit or Loss and Statement of Financial Position with comparatives for the year ended 31st December 2018.

Statement of Financial Position as at 31 December 2018 Assets 2018 2017 GHS GHS Non-current assets Property, plant and equipment 802,180 656,071 Current assets 64,422 905,679 Inventory 86,550 Trade receivables 807,712 Prepayment and accrued income Cash at bank and in hand 97,022 45,729 1,327 1,068,450 1,008,354 68,363 Total assets 1,870,630 1,664,425_ Equity and liabilities Equity Ordinary shares 258,178 258,178 651,721 909,899 410,591 668,769 Income surplus Non-current liabilities 10% loan stock 100,000 100,000 Current liabilities 627,018 81,279 545,340 280,464 Trade payables Accruals and deferred income Corporate taxes Other taxes 108,000 37,200 44,434 860,731 1,870,630 1,664,425 32,652 895,656 Total equity and liabilities Required: a. Calculate the following ratios: i. Profitability ratios - Return on Capital Employed, Return on Equity, Gross profit margin and Net profit margin ii. Long term solvency and stability - DebtU/Asset ratio, Gearing ratio and Interest cover iii. Short-term solvency and liquidity – Current ratio and Acid test ratio iv. Efficiency (turnover ratios) – Account receivable collection period, Account payable payment period, Inventory turnover (times) b. Prepare a report addressed to the Chief Executive Officer, assessing the relative performance and financial position of Glory Ltd for the year ended 31" December, 2018
Transcribed Image Text:Statement of Financial Position as at 31 December 2018 Assets 2018 2017 GHS GHS Non-current assets Property, plant and equipment 802,180 656,071 Current assets 64,422 905,679 Inventory 86,550 Trade receivables 807,712 Prepayment and accrued income Cash at bank and in hand 97,022 45,729 1,327 1,068,450 1,008,354 68,363 Total assets 1,870,630 1,664,425_ Equity and liabilities Equity Ordinary shares 258,178 258,178 651,721 909,899 410,591 668,769 Income surplus Non-current liabilities 10% loan stock 100,000 100,000 Current liabilities 627,018 81,279 545,340 280,464 Trade payables Accruals and deferred income Corporate taxes Other taxes 108,000 37,200 44,434 860,731 1,870,630 1,664,425 32,652 895,656 Total equity and liabilities Required: a. Calculate the following ratios: i. Profitability ratios - Return on Capital Employed, Return on Equity, Gross profit margin and Net profit margin ii. Long term solvency and stability - DebtU/Asset ratio, Gearing ratio and Interest cover iii. Short-term solvency and liquidity – Current ratio and Acid test ratio iv. Efficiency (turnover ratios) – Account receivable collection period, Account payable payment period, Inventory turnover (times) b. Prepare a report addressed to the Chief Executive Officer, assessing the relative performance and financial position of Glory Ltd for the year ended 31" December, 2018
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