a) Users of accounting information and their information needs:

1. Shareholders: Information on profitability, dividends, and return on investment.
2. Bankers: Information on the financial stability and creditworthiness of the business to assess loan repayment ability.
3. Government: Information on taxes owed, compliance with regulations, and economic contributions.
4. Suppliers: Information on the financial stability and liquidity of the business to assess credit terms and payment reliability.
5. Customers: Information on the financial health of the business to assess the ability to provide goods and services in the future.
6. Management: Information on performance, budgeting, and strategic decision-making.
7. General public: Information on the business’s economic impact, environmental practices, and corporate social responsibility.

b)
i) (Sales to capital employed): 1,400,000/1,120,000 = 1.25 times
ii) Liquid (acid test) ratio: 160,000/320,000 = 0.5:1
iii) Interest cover: 396,000/22,000 = 18 times
iv) Dividend cover: 316,000/200,000 = 1.58 times
v) Gearing ratio: (550,000/1,120,000) x 100 = 49.11%
vi) Earnings per share: 316,000/450,000 = 70.22 pesewas

C)  Explain the implications of the level of gearing for the ordinary shareholders of Gade Ltd.

When profits are high, the ordinary shareholders will benefit from the high gearing ratio of Gade Ltd, resulting in increased earnings per share. Lower interest rates will have a minimal effect on profit and will benefit the ordinary shareholders. However, if the profits of Gade Ltd were to fall, shareholders would be disadvantaged because the interest payments and preference share dividends must be met before any ordinary dividends are paid. An increase in interest rates would also affect the return of the ordinary shareholders. Gade Ltd might have to reduce gearing by selling off any surplus assets or increasing revenue reserves as an alternative to the payment of dividends.