In: Accounting
Statement of financial position |
|
Assets |
2009 |
Property, plant and equipment (PPE) at cost price |
192 000 |
Accumulated depreciation |
(22 000) |
PPE at carrying value |
170 000 |
Investment in shares |
3 000 |
Non-current assets |
173 000 |
Inventories |
30 000 |
Trade receivables |
45 000 |
Cash and cash equivalents |
24 000 |
Current assets |
99 000 |
Total assets |
272 000 |
Equity and liabilities |
|
Share capital |
50 000 |
Reserves |
4 000 |
Retained earnings |
28 000 |
Ordinary shareholders’ equity |
82 000 |
Preference shares |
28 000 |
Shareholders’ equity |
110 000 |
Total equity |
110 000 |
Long-term debt |
80 000 |
Non-current liabilities |
80 000 |
Trade payables |
25 000 |
Bank overdraft |
1 000 |
Tax payable |
1 000 |
Dividends payable |
5 000 |
Short-term loans |
50 000 |
Current liabilities |
82 000 |
Total equity and liabilities |
272 000 |
Statement of comprehensive income |
2009 |
Turnover |
150 000 |
Cost of sales and services rendered |
(70 000) |
Gross profit |
80 000 |
Operating expenses |
(40 000) |
Operating income |
4 000 |
Operating profit |
44 000 |
Investment income |
2 000 |
Finance cost |
(14 660) |
Profit before tax |
31 340 |
Tax |
(9 400) |
Profit after tax |
21 940 |
Preference share dividends |
(2 800) |
Attributable earnings |
19 140 |
Ordinary dividends |
(10 000) |
Retained earnings (for the year) |
9 140 |
Additional information:
You are required to:
Calculate the following ratios and present them in the correct units of measurement:
a) calculation of cash conversion cycle
Calculation of DSO=(45000/2)/(44000/365days)
=22500/120.5
=187days
Calculation of DIO=[(30000+50000)/2]/(70000/365)
=40000/192
=208 days
Calculation of DPO=(25000/2)/(70000/365)
=12500/192
=65 days
Cash conversion cycle = DSO+DIO–DPO
=187days+208days –65days
=330days
b)calculation of debt assets ratio
debt assets ratio
=long term debt /total assets
=80000/272000
=0.294
c) calculation of debt equity ratio
debt equity ratio
=long term debt /shareholders equity
=80000/50000
=1.6
d) calculation of financial leverage.
financial leverage
=earnings before interest and tax (EBIT) /earnings after tax (EAT)
=44000/21940
=2.005