During the year to 31 December 2023, Tinderlake Ltd attempted to stimulate sales and increase its profits
Question:
During the year to 31 December 2023, Tinderlake Ltd attempted to stimulate sales and increase its profits by reducing selling prices, holding larger inventories and giving customers longer credit. All of the company's purchases and sales are on credit terms. Summarised financial statements for the year to 31 December 2023 (with comparative figures for 2022) are as follows:
Ordinary dividends of £480,000 were paid during the year to 31 December 2023.
Required:Calculate the following ratios for Tinderlake Ltd for each of the two years concerned and comment on the results of these calculations:(a) Return on capital employed
(b) Return on equity(c) Gross profit margin
(d) Operating profit margin(e) Current ratio
(f) Quick ratio(g) Inventory holding period
(h) Receivables collection period(i) Capital gearing ratio.
Step by Step Answer:
International Financial Reporting a practical guide
ISBN: 9781292439426
8th Edition
Authors: Alan Melville