- 20 Marks
PSAF – L2 – Q13.3- Financial Statements Discussion and Analysis
Compute financial ratios for two West African nations based on provided financial statements.
Question
Nation A and Nation B are West African Nations that attained independence around the same period. Presented below are the financial statements of the two countries.
Statement of financial position as at 31 December 2023
| Nation A (GH¢ million) | Nation B (GH¢ million) | |
|---|---|---|
| Current liabilities | ||
| Payables | 9,300 | 6,150 |
| Trust monies | 2,100 | 1,350 |
| Domestic debt | 24,000 | 6,750 |
| 35,400 | 14,250 | |
| Non-current liabilities | ||
| Domestic debt | 54,000 | 27,000 |
| External debt | 63,675 | 33,000 |
| 117,675 | 60,000 | |
| Total fund and liabilities | 153,075 | 74,250 |
Required:
(a) From the information provided, compute for the two countries respectively:
- Grant to Total Revenue ratio;
- Wage Bill to Tax Revenue ratio;
- Interest to Revenue ratio;
- Debt to GDP ratio;
- Capital expenditure per Capita; and
- Wages bill to Total Expenditure ratio. (b) Based on the result in question (a), write a report discussing and analyzing the financial performance and financial position of the two countries. Include in your report the limitations of the analysis of the two countries.
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