Question

20]

The annual financial statements of Hunter Ltd for the financial years ended 31 December2018 and 2019 are presented below.

Hunter Limited

Statement of profit or loss and other comprehensive income for the year ended 31 December 2019

	2019 R		2018 R
Revenue from sales	540 000		480 000
Cost of Sales	(360 000)		(318 000)
Opening Inventory	42 000		30 000
Purchases	390 000		330 000
Goods available for sale	432 000		360 000
Closing Inventory	(72 000)		(42 000)
Gross Profit	180 000		162 000
Selling and distribution expenses	(37 000)		(36 000)
Administration expenses	(72 000)		(54 000)
Interest on loan	(3 000)		(3 000)
Profit before taxation	68 000		69 000
Taxation paid	(20 400)		(20 700)
Profit for the year	47 600		48 300
Other comprehensive income	Nil		Nil
Total comprehensive income for the year	47 600		48 300

Hunter Limited

Statement of changes in equity for the year ended 31 December 2019

	Ordinary Share capital	Retained earnings	Preference share capital	Total
Balance at 1 January 2018	120 000	12 000	60 000	192 000
Total comprehensive income	-	48 300	-	48 300
Preference dividends paid	-	(6 000)	-	(6 000)
Ordinary dividends declared	-	(24 000)	-	(24 000)
Balance at 31 December 2018	120 000	30 300	60 000	210 300
Total comprehensive income	-	47 600	-	47 600
Preference dividends paid	-	(6 000)	-	(6 000)
Ordinary dividends declared	-	(15 000)	-	(15 000)
Balance at 31 December 2019	120 000	56 900	60 000	236 900

Hunter Limited

Statement of financial position as at 31 December 2019  

R R     

	Note	2019		2018
Non-current assets		258 000		264 000
Property, plant and equipment	1	258 000		264 000
Current assets		257 000		111 000
Inventory		72 000		42 000
Trade Debtors		182 000		60 000
Bank		3 000		9 000
		515 000		375 000
Equity		236 900		210 300
Share capital	2	120 000		120 000
Retained earnings		56 900		30 300
Preference share capital	2	60 000		60 000
Non-current liabilities		60 000		60 000
5 % Debentures		60 000		60 000
Current liabilities		218 100		104 700
Trade Creditors		182 700		60 000
Taxation payable		20 400		20 700
Shareholders for dividends		15 000		24 000
		515 000		375 000

Additional Information and Notes:

(1) All purchases and sales are made on credit terms.

(2) Trade debtors at 31 December 2017 amounted to R140 000.

Required:

Using the information provided above evaluate the company’s performance and position using financial ratio analysis.

Answer 1