Topic: Analysis and Interpretation of Financial Statements

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CR – Nov 2024 – L3 – Q5b – Financial Performance & Digital Technology Integration

Evaluating the financial performance of Nsawkaw PLC and addressing challenges of digital technology integration in accounting.

Question

(a) Compute the following ratios for the years ended 2024 & 2023:
i) Operating profit margin
ii) Return on parent’s equity
iii) Earnings per share
iv) Current ratio
v) Trade receivables days
vi) Total liabilities to total assets %

(b) Write a report to the directors of DPEF evaluating the inter-period financial performance and position of NK using the above six (6) ratios. The report should draw attention to how the non-financial metrics combine with the financial counterparts to showcase the prospects and viability of NK. c) The concept of double materiality is relevant to sustainability impacts and dependencies. It
incorporates financial materiality and impact materiality.

Answer

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Tags: Compliance, Cybersecurity, Digital Transformation, Ethics, Financial Analysis, Ratio Analysis
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements, Beyond financial reporting
Series: Nov 2024

CR – Nov 2024 – L3 – Q5a – Financial Analysis and Investment Evaluation

Compute financial ratios for Nsawkaw PLC to evaluate its financial performance for investment recommendation.

Question

Nsawkaw PLC (NK), a gold processing and trading company, has been identified by Djaraye Private Equity Fund (DPEF) as a target for long-term equity investment. As a financial consultant of DPEF, you have been tasked to evaluate the integrated financial condition of NK and make an investment recommendation.

Below are the summarised versions of NK’s Consolidated Financial Statements for the year ended June 30, 2024 (together with its comparative period):

Summarised Consolidated Statement of Profit or Loss for the year ended 30 June 2024

	2024 (GH¢000)	2023 (GH¢000)
Revenue	2,538,000	2,125,000
Operational expenses	(1,909,100)	(1,592,900)
Interest costs	(186,700)	(157,250)
Taxation	(234,000)	(198,500)
Profit after tax	208,200	176,350
Other comprehensive income	17,900	10,550
Total comprehensive income	226,100	186,900

Summarised Consolidated Statement of Changes in Equity for the year ended 30 June 2024

	Equity Holders of the Parent (GH¢000)	Non-controlling Interests’ Equity (GH¢000)	Total Equity (GH¢000)
2024
Balances b/d	457,200	65,600	522,800
Total comprehensive income	190,800	35,300	226,100
Dividends	(110,000)	(8,700)	(118,700)
Balances c/d	538,000	92,200	630,200
2023
Balances b/d	355,000	46,650	401,650
Total comprehensive income	160,500	26,400	186,900
Dividends	(58,300)	(7,450)	(65,750)
Balances c/d	457,200	65,600	522,800

Summarised Statement of Financial Position as at 30 June 2024

	2024 (GH¢000)	2023 (GH¢000)
Non-current assets
Property, plant, and equipment	718,000	657,000
Others	156,000	99,000
Total Non-current assets	874,000	756,000
Current assets
Trade receivables	140,000	121,000
Others	236,500	123,050
Total Current assets	376,500	244,050
Total Assets	1,250,500	1,000,050
Total Equity and Liability	1,250,500	1,000,050

Additional information:

The total number of equity shares outstanding was 1.2 million and 1.4 million at 30 June 2023 and 30 June 2024 respectively.
Other comprehensive income attributable to non-controlling interests for the years ended 30 June 2023 and 2024 amounted to GH¢8.05 million and GH¢9.6 million respectively.
Non-current liabilities at 30 June 2023 and 30 June 2024 amounted to GH¢250,800 and GH¢308,510 respectively.
The following metrics have been gleaned from NK’s published sustainability reports across the two years:

Metric	2024	2023
Scope 1 & 2 carbon emissions (tonnes of CO2)	650	780
Scope 3 carbon emissions (tonnes of CO2)	2,400	2,380
Women in senior management (%)	21	16
Total recordable injury frequency rate (TRIFR) per 100 full-time workers	3.3	4.1

The scope and definitions of the above sustainability measures have remained materially unchanged across the two years.

Required:

Compute the following ratios for the years ended 2024 & 2023:

Operating profit margin
Return on parent’s equity
Earnings per share
Current ratio
Trade receivables days
Total liabilities to total assets %

Answer

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Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: Nov 2024

CR – May 2020 – Q5 – Financial Performance and Position of Bossman Ltd

This question involves analyzing the financial performance and position of Bossman Ltd over three years using ratio analysis.

Question

Answer

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Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: MAY 2020

CR – Nov 2020 – L3 – Q5a – Return on Equity & Return on Capital Employed

Calculate and interpret return on equity and return on capital employed for Bounce Back Ltd for two years.

Question

Bounce Back Ltd Financial Information:

Statement of Comprehensive Income for the year ended 30 November:

	2019	2018
Profit before interest and tax	GH¢2,200,000	GH¢1,570,000
Interest expense	(GH¢170,000)	(GH¢150,000)
Profit before tax	GH¢2,030,000	GH¢1,420,000
Taxation	(GH¢730,000)	(GH¢520,000)
Profit after tax	GH¢1,300,000	GH¢900,000
Dividends paid	(GH¢250,000)	(GH¢250,000)
Retained profit	GH¢1,050,000	GH¢650,000

Statement of Financial Position as at 30 November:

	2019	2018
Non-current assets (written-down value)	GH¢6,350,000	GH¢5,600,000
Current assets
Trade receivables	GH¢2,100,000	GH¢2,070,000
Inventories	GH¢1,710,000	GH¢1,540,000
Total current assets	GH¢3,810,000	GH¢3,610,000
Creditors: amounts due within one year
Trade payables	GH¢1,040,000	GH¢1,130,000
Taxation	GH¢550,000	GH¢450,000
Bank overdraft	GH¢370,000	GH¢480,000
Total current liabilities	GH¢1,960,000	GH¢2,060,000
Net current assets	GH¢1,850,000	GH¢1,550,000
Total net assets	GH¢8,200,000	GH¢7,150,000
Creditors: amounts due after more than one year
10% debentures	GH¢1,500,000	GH¢1,500,000
Equity
Share capital (ordinary shares of 50p fully paid up)	GH¢3,000,000	GH¢3,000,000
Retained earnings	GH¢3,700,000	GH¢2,650,000
Total equity	GH¢6,700,000	GH¢5,650,000
Total long-term liabilities and equity	GH¢8,200,000	GH¢7,150,000

Required:

Calculate, for both years, the return on equity and the return on capital employed.

Answer

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Tags: Financial Analysis, Profitability Ratios, Return on Capital Employed, Return on Equity
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: NOV 2020

CR – Nov 2020 – L3 – Q5b – Investment Ratios

Calculate two investment ratios of interest to a potential investor for two years.

Question

Calculate, for both years, TWO (2) investment ratios of interest to a potential investor.

Answer

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Tags: Dividend Cover, Dividend per share, Earnings Per Share, Financial Analysis
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: NOV 2020

CR – Nov 2020 – L3 – Q5c – Ratios for Lenders

Calculate two ratios of interest to a potential long-term lender for two years.

Question

Calculate, for both years, TWO (2) ratios of interest to a potential long-term lender.

Answer

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Tags: Debt ratio, Financial Analysis, Gearing, Interest Cover
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: NOV 2020

CR – Nov 2020 – L3 – Q5d – Performance Analysis

Report on the performance and state of the business using calculated ratios from the viewpoint of shareholders and lenders.

Question

Report on the performance and state of the business from the viewpoint of a potential shareholder and lender using the ratios calculated above and explain any weaknesses in these ratios.

Answer

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Tags: Business performance, Financial Performance, Profitability analysis, Ratio Analysis
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: NOV 2020

CR – May 2021 – L3 – Q5 – Financial performance of Shop First Ltd

Analyze the financial performance of Shop First Ltd for 2020 and discuss the effects of discontinued operations and contingencies.

Question

Shop First Ltd operates supermarket chains across the sixteen (16) regions of Ghana. The firm has been in commercial operation for more than two decades, growing its operations through an effective supply chain and financial management. However, in the last few years, keen competition and worsening general economic performance have steadied the consistent growths experienced over the years, resulting in the entity disposing off part of its operations. Below are the financial statements of Shop First Ltd:

Answer

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Tags: Contingencies, Discontinued Operations, Financial Performance, Gearing, Liquidity, Profitability, Ratio Analysis
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: MAY 2021

CR – May 2019 – L3 – Q4 – Analysis and interpretation of financial statements

The question requires calculation of financial ratios and analysis of the financial performance and cash position of Madina Ltd for the year ended 30 September 2018.

Question

Below are the recently issued financial statements of Madina Ltd, a listed company, for the year ended 30 September 2018, together with comparatives for 2017.

Statement of Profit or Loss for the year ended 30 September:

Details	2018 (GH¢’000)	2017 (GH¢’000)
Revenue	125,000	90,000
Cost of Sales	(100,000)	(75,000)
Gross Profit	25,000	15,000
Operating Expenses	(13,000)	(11,000)
Finance Costs	(4,000)	–
Profit before Tax	8,000	4,000
Tax (at 25%)	(2,000)	(1,000)
Profit for the year	6,000	3,000

Statement of Financial Position as at 30 September:

Details	2018 (GH¢’000)	2017 (GH¢’000)
Non-Current Assets
Property, Plant, and Equipment	105,000	45,000
Goodwill	5,000	–
Total Non-Current Assets	110,000	45,000
Current Assets
Inventory	12,500	7,500
Receivables	6,500	4,000
Bank	–	7,000
Total Current Assets	19,000	18,500
Total Assets	129,000	63,500
Equity and Liabilities
Equity
Share Capital	50,000	50,000
Retained Earnings	7,000	6,000
Total Equity	57,000	56,000
Non-Current Liabilities
8% Loan Notes	50,000	–
Current Liabilities
Bank Overdraft	8,500	–
Trade Payables	11,500	6,500
Current Tax Payable	2,000	1,000
Total Current Liabilities	22,000	7,500
Total Equity and Liabilities	129,000	63,500

Additional Information:

On 1 October 2017, Madina Ltd acquired 100% of the net assets of Aboabu Ltd for GH¢50 million. In order to finance this transaction, Madina Ltd issued GH¢50 million 8% loan notes on the acquisition date.
Aboabu Ltd’s results for the year ended 30 September 2018 are shown below:

Aboabu Ltd’s Statement of Profit or Loss for the year ended 30 September:

Details	GH¢’000
Revenue	35,000
Cost of Sales	(20,000)
Gross Profit	15,000
Operating Expenses	(4,000)
Profit before Tax	11,000
Tax (at 25%)	(2,750)
Profit for the year	8,250

Aboabu Ltd has not paid any dividend during the year, but Madina Ltd paid a dividend of GH¢0.05 per share.
The following ratios have been calculated for Madina Ltd for the year ended 30 September 2017:
- Return on capital employed: 7.1%
- Gross profit margin: 16.7%
- Net profit (before tax) margin: 4.4%

Required:

a) Calculate the equivalent ratios for Madina Ltd for 2018:
i) Including the results of Aboabu Ltd acquired during the year. (3 marks)
ii) Excluding all effects of the purchase of Aboabu Ltd. (3 marks)

b) Analyse the performance of Madina Ltd for the year ended 30 September 2018. (5 marks)

c) Analyse the cash position of Madina Ltd as at 30 September 2018. (4 marks)

Answer

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Tags: Cash Flow, Financial Ratios, Profitability, Return on Capital Employed
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: MAY 2019

CR – May 2018 – L3 – Q4c – Analysis and Interpretation of Financial Statements

Analyze and compare the financial performance of two companies in terms of operating performance, liquidity, gearing, and investment ratios.

Question

Fordland Ltd and Fiatland Ltd are two companies in the garment industry. The following are financial ratios computed by the Research Department of ICAG as part of analyzing companies’ performance industry by industry:

Ratios	Fordland Ltd	Fiatland Ltd
Return on Capital Employed (ROCE)	24.10%	30%
Net Assets Turnover	1.9 times	2.5 times
Gross Profit Margin	35%	20%
Net Profit Margin	10.50%	38%
Current Ratio	1.0:1	2.0:1
Quick Ratio	0.8:1	1.0:1
Inventory Holding Period	60 days	90 days
Receivables Collection Period	58 days	60 days
Payables Payment Period	50 days	50 days
Debt to Equity Ratio	50%	30%
Dividend Yield	3%	2%
Dividend Cover	2 times	1.5 times

Required:
Write a report analyzing and comparing the financial performance of Fordland Ltd and Fiatland Ltd. The report should cover operating performance, liquidity, gearing, and investment ratios. (8 marks)

Answer

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Tags: Financial Performance, Gearing, Investment, Liquidity, Operating performance, Ratio Analysis
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: MAY 2018

CR – Nov 2024 – L3 – Q5b – Financial Performance & Digital Technology Integration

Evaluating the financial performance of Nsawkaw PLC and addressing challenges of digital technology integration in accounting.

Question

Answer

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Tags: Compliance, Cybersecurity, Digital Transformation, Ethics, Financial Analysis, Ratio Analysis
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements, Beyond financial reporting
Series: Nov 2024

CR – Nov 2024 – L3 – Q5a – Financial Analysis and Investment Evaluation

Compute financial ratios for Nsawkaw PLC to evaluate its financial performance for investment recommendation.

Question

Below are the summarised versions of NK’s Consolidated Financial Statements for the year ended June 30, 2024 (together with its comparative period):

Summarised Consolidated Statement of Profit or Loss for the year ended 30 June 2024

	2024 (GH¢000)	2023 (GH¢000)
Revenue	2,538,000	2,125,000
Operational expenses	(1,909,100)	(1,592,900)
Interest costs	(186,700)	(157,250)
Taxation	(234,000)	(198,500)
Profit after tax	208,200	176,350
Other comprehensive income	17,900	10,550
Total comprehensive income	226,100	186,900

Summarised Consolidated Statement of Changes in Equity for the year ended 30 June 2024

	Equity Holders of the Parent (GH¢000)	Non-controlling Interests’ Equity (GH¢000)	Total Equity (GH¢000)
2024
Balances b/d	457,200	65,600	522,800
Total comprehensive income	190,800	35,300	226,100
Dividends	(110,000)	(8,700)	(118,700)
Balances c/d	538,000	92,200	630,200
2023
Balances b/d	355,000	46,650	401,650
Total comprehensive income	160,500	26,400	186,900
Dividends	(58,300)	(7,450)	(65,750)
Balances c/d	457,200	65,600	522,800

Summarised Statement of Financial Position as at 30 June 2024

	2024 (GH¢000)	2023 (GH¢000)
Non-current assets
Property, plant, and equipment	718,000	657,000
Others	156,000	99,000
Total Non-current assets	874,000	756,000
Current assets
Trade receivables	140,000	121,000
Others	236,500	123,050
Total Current assets	376,500	244,050
Total Assets	1,250,500	1,000,050
Total Equity and Liability	1,250,500	1,000,050

Additional information:

The total number of equity shares outstanding was 1.2 million and 1.4 million at 30 June 2023 and 30 June 2024 respectively.
Other comprehensive income attributable to non-controlling interests for the years ended 30 June 2023 and 2024 amounted to GH¢8.05 million and GH¢9.6 million respectively.
Non-current liabilities at 30 June 2023 and 30 June 2024 amounted to GH¢250,800 and GH¢308,510 respectively.
The following metrics have been gleaned from NK’s published sustainability reports across the two years:

Metric	2024	2023
Scope 1 & 2 carbon emissions (tonnes of CO2)	650	780
Scope 3 carbon emissions (tonnes of CO2)	2,400	2,380
Women in senior management (%)	21	16
Total recordable injury frequency rate (TRIFR) per 100 full-time workers	3.3	4.1

The scope and definitions of the above sustainability measures have remained materially unchanged across the two years.

Required:

Compute the following ratios for the years ended 2024 & 2023:

Operating profit margin
Return on parent’s equity
Earnings per share
Current ratio
Trade receivables days
Total liabilities to total assets %

Answer

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Tags: Financial Analysis, Investment Decision, Leverage, Liquidity, Profitability, Ratio Analysis, Working Capital Management
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: Nov 2024

CR – May 2020 – Q5 – Financial Performance and Position of Bossman Ltd

This question involves analyzing the financial performance and position of Bossman Ltd over three years using ratio analysis.

Question

Answer

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Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: MAY 2020

CR – Nov 2020 – L3 – Q5a – Return on Equity & Return on Capital Employed

Calculate and interpret return on equity and return on capital employed for Bounce Back Ltd for two years.

Question

Bounce Back Ltd Financial Information:

Statement of Comprehensive Income for the year ended 30 November:

	2019	2018
Profit before interest and tax	GH¢2,200,000	GH¢1,570,000
Interest expense	(GH¢170,000)	(GH¢150,000)
Profit before tax	GH¢2,030,000	GH¢1,420,000
Taxation	(GH¢730,000)	(GH¢520,000)
Profit after tax	GH¢1,300,000	GH¢900,000
Dividends paid	(GH¢250,000)	(GH¢250,000)
Retained profit	GH¢1,050,000	GH¢650,000

Statement of Financial Position as at 30 November:

	2019	2018
Non-current assets (written-down value)	GH¢6,350,000	GH¢5,600,000
Current assets
Trade receivables	GH¢2,100,000	GH¢2,070,000
Inventories	GH¢1,710,000	GH¢1,540,000
Total current assets	GH¢3,810,000	GH¢3,610,000
Creditors: amounts due within one year
Trade payables	GH¢1,040,000	GH¢1,130,000
Taxation	GH¢550,000	GH¢450,000
Bank overdraft	GH¢370,000	GH¢480,000
Total current liabilities	GH¢1,960,000	GH¢2,060,000
Net current assets	GH¢1,850,000	GH¢1,550,000
Total net assets	GH¢8,200,000	GH¢7,150,000
Creditors: amounts due after more than one year
10% debentures	GH¢1,500,000	GH¢1,500,000
Equity
Share capital (ordinary shares of 50p fully paid up)	GH¢3,000,000	GH¢3,000,000
Retained earnings	GH¢3,700,000	GH¢2,650,000
Total equity	GH¢6,700,000	GH¢5,650,000
Total long-term liabilities and equity	GH¢8,200,000	GH¢7,150,000

Required:

Calculate, for both years, the return on equity and the return on capital employed.

Answer

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Tags: Financial Analysis, Profitability Ratios, Return on Capital Employed, Return on Equity
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: NOV 2020

CR – Nov 2020 – L3 – Q5b – Investment Ratios

Calculate two investment ratios of interest to a potential investor for two years.

Question

Calculate, for both years, TWO (2) investment ratios of interest to a potential investor.

Answer

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Tags: Dividend Cover, Dividend per share, Earnings Per Share, Financial Analysis
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: NOV 2020

CR – Nov 2020 – L3 – Q5c – Ratios for Lenders

Calculate two ratios of interest to a potential long-term lender for two years.

Question

Calculate, for both years, TWO (2) ratios of interest to a potential long-term lender.

Answer

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Tags: Debt ratio, Financial Analysis, Gearing, Interest Cover
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: NOV 2020

CR – Nov 2020 – L3 – Q5d – Performance Analysis

Report on the performance and state of the business using calculated ratios from the viewpoint of shareholders and lenders.

Question

Report on the performance and state of the business from the viewpoint of a potential shareholder and lender using the ratios calculated above and explain any weaknesses in these ratios.

Answer

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Tags: Business performance, Financial Performance, Profitability analysis, Ratio Analysis
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: NOV 2020

CR – May 2021 – L3 – Q5 – Financial performance of Shop First Ltd

Analyze the financial performance of Shop First Ltd for 2020 and discuss the effects of discontinued operations and contingencies.

Question

Answer

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Tags: Contingencies, Discontinued Operations, Financial Performance, Gearing, Liquidity, Profitability, Ratio Analysis
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: MAY 2021

CR – May 2019 – L3 – Q4 – Analysis and interpretation of financial statements

The question requires calculation of financial ratios and analysis of the financial performance and cash position of Madina Ltd for the year ended 30 September 2018.

Question

Below are the recently issued financial statements of Madina Ltd, a listed company, for the year ended 30 September 2018, together with comparatives for 2017.

Statement of Profit or Loss for the year ended 30 September:

Details	2018 (GH¢’000)	2017 (GH¢’000)
Revenue	125,000	90,000
Cost of Sales	(100,000)	(75,000)
Gross Profit	25,000	15,000
Operating Expenses	(13,000)	(11,000)
Finance Costs	(4,000)	–
Profit before Tax	8,000	4,000
Tax (at 25%)	(2,000)	(1,000)
Profit for the year	6,000	3,000

Statement of Financial Position as at 30 September:

Details	2018 (GH¢’000)	2017 (GH¢’000)
Non-Current Assets
Property, Plant, and Equipment	105,000	45,000
Goodwill	5,000	–
Total Non-Current Assets	110,000	45,000
Current Assets
Inventory	12,500	7,500
Receivables	6,500	4,000
Bank	–	7,000
Total Current Assets	19,000	18,500
Total Assets	129,000	63,500
Equity and Liabilities
Equity
Share Capital	50,000	50,000
Retained Earnings	7,000	6,000
Total Equity	57,000	56,000
Non-Current Liabilities
8% Loan Notes	50,000	–
Current Liabilities
Bank Overdraft	8,500	–
Trade Payables	11,500	6,500
Current Tax Payable	2,000	1,000
Total Current Liabilities	22,000	7,500
Total Equity and Liabilities	129,000	63,500

Additional Information:

On 1 October 2017, Madina Ltd acquired 100% of the net assets of Aboabu Ltd for GH¢50 million. In order to finance this transaction, Madina Ltd issued GH¢50 million 8% loan notes on the acquisition date.
Aboabu Ltd’s results for the year ended 30 September 2018 are shown below:

Aboabu Ltd’s Statement of Profit or Loss for the year ended 30 September:

Details	GH¢’000
Revenue	35,000
Cost of Sales	(20,000)
Gross Profit	15,000
Operating Expenses	(4,000)
Profit before Tax	11,000
Tax (at 25%)	(2,750)
Profit for the year	8,250

Aboabu Ltd has not paid any dividend during the year, but Madina Ltd paid a dividend of GH¢0.05 per share.
The following ratios have been calculated for Madina Ltd for the year ended 30 September 2017:
- Return on capital employed: 7.1%
- Gross profit margin: 16.7%
- Net profit (before tax) margin: 4.4%

Required:

b) Analyse the performance of Madina Ltd for the year ended 30 September 2018. (5 marks)

c) Analyse the cash position of Madina Ltd as at 30 September 2018. (4 marks)

Answer

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Tags: Cash Flow, Financial Ratios, Profitability, Return on Capital Employed
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: MAY 2019

CR – May 2018 – L3 – Q4c – Analysis and Interpretation of Financial Statements

Analyze and compare the financial performance of two companies in terms of operating performance, liquidity, gearing, and investment ratios.

Question

Ratios	Fordland Ltd	Fiatland Ltd
Return on Capital Employed (ROCE)	24.10%	30%
Net Assets Turnover	1.9 times	2.5 times
Gross Profit Margin	35%	20%
Net Profit Margin	10.50%	38%
Current Ratio	1.0:1	2.0:1
Quick Ratio	0.8:1	1.0:1
Inventory Holding Period	60 days	90 days
Receivables Collection Period	58 days	60 days
Payables Payment Period	50 days	50 days
Debt to Equity Ratio	50%	30%
Dividend Yield	3%	2%
Dividend Cover	2 times	1.5 times

Answer

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Tags: Financial Performance, Gearing, Investment, Liquidity, Operating performance, Ratio Analysis
Level: Level 3