The following are the accounts of JRA Ltd. a company that manufactures playground equipment, for the year ended 30 November 2015 and 2016. STATEMENTS OF INCOME 2016 2015 GHC GHC Profit before interest and tax 13,200 9,420 Interest Expense 1,020 900 Profit before tax 12, 180 8,520 Taxation 4,380 3, 120 Profit after tax 7,800 5,400 Dividend 1,500 1,500 Retained Profit 6,300 3,900 STATEMENTS OF FINANCIAL POSITION ASSETS 2016 2017 Non-current Assets GH000 GH000 Property Plant and Equipment 38, 100 33,600 Current Assets Inventories 12,600 12,420 Receivables 10,260 9,240 Total Assets 60,960 55,260 EQUITY AND LIABILITY Stated Capital 18,000 18,000 Share Deals 4,500 4,500 Retained Earning 17,700 11400 Non-current Liabilities 10% Debentures 9,000 9,000 Current Liabilities Payables 6,240 6,780 Taxation 3,300 2,700 Bank Overdraft 2,220 2,880 Total Equities and Liabilities 60,960 55,260 Required (i) Calculate the return on equity and any three (3) investment ratios of interest to a potential investor (ii) Calculate three (3) ratios of interest to a potential long-term lender. (iii) Report on the performance and state of the business from the view point of a potential shareholder and lender, using the ratios calculated above and explain any weaknesses in these ratios
The following are the accounts of JRA Ltd. a company that manufactures playground equipment, for the year ended 30 November 2015 and 2016.
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STATEMENTS OF INCOME 2016 2015 |
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GHC GHC Profit before interest and tax 13,200 9,420 Interest Expense 1,020 900 Profit before tax 12, 180 8,520 Profit after tax 7,800 5,400 Dividend 1,500 1,500 Retained Profit 6,300 3,900 |
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ASSETS 2016 2017 |
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Non-current Assets GH000 GH000 Property Plant and Equipment 38, 100 33,600 Current Assets Inventories 12,600 12,420 Receivables 10,260 9,240 Total Assets 60,960 55,260 |
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EQUITY AND LIABILITY |
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Stated Capital 18,000 18,000 Share Deals 4,500 4,500 Non-current Liabilities 10% Debentures 9,000 9,000 Current Liabilities |
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Payables 6,240 6,780 Taxation 3,300 2,700 Bank Overdraft 2,220 2,880 Total Equities and Liabilities 60,960 55,260 |
Required
(i) Calculate the return on equity and any three (3) investment ratios of interest to a potential investor
(ii) Calculate three (3) ratios of interest to a potential long-term lender.
(iii) Report on the performance and state of the business from the view point of a potential shareholder and lender, using the ratios calculated above and explain any weaknesses in these ratios
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