The following are summarized financial statements of Anna Limited for the year ended 31st December 2022.Comparable figures for the previous year are also shown Income statement for the year ended 31st December 2022 2021 Shs 000 Shs 000 Sales 57,600 36,000 Less cost of goods (35,400) (21,000) GROSS PROFIT 22,200 15,000 Trading expenses (9,900) (8,100) Net profit before interest and tax 1 2,300 6,900 Less debenture interest (450) (450) Net profit before tax 11,850 6,450 Less corporate tax (5,760) (2,880) Net profit after tax 6,090 3,570 Less ordinary share dividend (3,150) (2,250) Undistributed profit for the year 2,940 1,320 N/B Assume 25% of the sales are on credit Statement of financial position as at 31st December 2022 2021 Shs 000 Shs 000 Fixed assets 17,200 11,800 Less depreciation (4,500) (3,600) Inventories 9,900 7,200 Accounts Receivable 6,300 4,500 Marketable Securities 5,000 5,000 Cash/bank balance 0 1,440 Total Assets 33,900 26,340 Payables 3,600 2,610 Taxation 5,760 2,880 Bank overdraft 1,170 0 Proposed Dividend 3,150 2,250 Ordinary share capital Shs 25 per share 9,000 9,000 Undistributed profits 8,040 5,100 15% debentures-secured 3,180 4,500 Equity and Liabilities 33,900 26,340 Required: Compute the following ratios for Anna Limited for the year ended 31st December 2022 Liquidity ratios - Leverage ratios – Activity ratios – Profitability ratios –
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
The following are summarized financial statements of Anna Limited for the year ended 31st December 2022.Comparable figures for the previous year are also shown
Income statement for the year ended 31st December
2022 2021
Shs 000 Shs 000
Sales 57,600 36,000
Less cost of goods (35,400) (21,000)
GROSS PROFIT 22,200 15,000
Trading expenses (9,900) (8,100)
Net profit before interest and tax 1 2,300 6,900
Less debenture interest (450) (450)
Net profit before tax 11,850 6,450
Less corporate tax (5,760) (2,880)
Net profit after tax 6,090 3,570
Less ordinary share dividend (3,150) (2,250)
Undistributed profit for the year 2,940 1,320
N/B Assume 25% of the sales are on credit
2022 2021
Shs 000 Shs 000
Fixed assets 17,200 11,800
Less
Inventories 9,900 7,200
Marketable Securities 5,000 5,000
Cash/bank balance 0 1,440
Total Assets 33,900 26,340
Payables 3,600 2,610
Bank overdraft 1,170 0
Proposed Dividend 3,150 2,250
Ordinary share capital
Shs 25 per share 9,000 9,000
Undistributed profits 8,040 5,100
15% debentures-secured 3,180 4,500
Equity and Liabilities 33,900 26,340
Required:
Compute the following ratios for Anna Limited for the year ended 31st December 2022
Liquidity ratios -- Leverage ratios –
- Activity ratios –
- Profitability ratios –
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