Question

Financial Reporting Question

QUESTION 2 You are a consultant for Glory Lad, a quoted company operating in the manufacturing sector. Following are a Statement of Profit or Lows and Statement of Financial Pain with comparatives for the year ended 31" December 2018 Statement of Profit or Less for the year ended 31 December 2018 Sales revenue Cost of sales Gross profit Interest receivable Administration expenses Operating profie Interest Profit before taxation GHS 3,095.576 1.909.08 2.402.609 1.441.950 457.100 2.712 222872 360 345 347011 18.115 21.909 225.102 Profit for the year 267.90 19 Statement of Financial Position as at 31 December 2015 GHS 802.180 656071 Nos currentes Property, plant and equipment Currentes Inventory Trade receivables Prepayment and accrued income Cash at bank and in hand 307.712 1,068,450 1.00154 1.870610166 25.17 651.721 Total Equity and liabilities Equity Ordinary shares Income surplus New-current liabilities 10% loan stock Current liabilities Trade payables Accruals and deferred income Corporate taxes Other taxes 100.000 SE340 627,018 81.279 1.000 37.300 Total equity and liabilities 860,731 1.870,630 1.664 425 Required: a. Calculate the following ratios i Profitability ratios - Retum on Capital Employed. Return on Equity, Gross profit margin and Net profit margin Long term solvency and stability. Debe Asset tie, Gearing ratio and Interest cover Short-term solvency and liquidity - Current ratio and Acid test ratio IN. Efficiency (tumover ratios) - Account receivable collection period. Account payable payment period, Inventory turnover times) (6 marks) Prepare a report addressed to the Chief Executive Officer, assessing the relative performance and financial position of Gloyd for the year ended 31 December, 2015 (14 marks) (Total 28 marks)