Consider the following income statement for the year ended on 31/12/2021 (all data expressed in ):...

  

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Consider the following income statement for the year ended on 31/12/2021 (all data expressed in £): sales revenue 154,300 cost of sales -73,600 gross profit 80,700 wages -23,560 administrative expenses -9,560 rent expenses -12,000 change in warranties provision depreciation -2,000 -20,000 operating profits interest expenses 13,580 -1,260 12,320 pre-tax profits taxes (20%) profits for the year -2,464 9,856 And the following balance sheets for the same company: 31/12/2021 31/12/2020 PPE at cost 160,000 130,000 accumulated depreciation 95,000 75,000 PPE 65,000 55,000 current assets: inventories 5,670 34,500 12,340 receivables 23,670 4,000 15,746 prepaid rent cash 24,050 current liabilities: warranties provision 5,500 3,500 payables 42,000 45,600 non-current liabilities: bank loan 5,000 2,400 10% bond 10,000 10,000 equity: share capital retained profits 30,000 30,000 32,416 23,560 During 2021, the company paid dividends for £ 1,000 to shareholders. Taxes are paid in full on the last day of December. a) Prepare the cash flows statement for the year ended on 31/12/2021. What have been the main uses and sources of cash for the company during the year? [25 marks] b) Comment on the solvency and liquidity of the company using the ratios that you consider most appropriate. How have solvency and liquidity evolved in 2021? [10 marks] Consider the following income statement for the year ended on 31/12/2021 (all data expressed in £): sales revenue 154,300 cost of sales -73,600 gross profit 80,700 wages -23,560 administrative expenses -9,560 rent expenses -12,000 change in warranties provision depreciation -2,000 -20,000 operating profits interest expenses 13,580 -1,260 12,320 pre-tax profits taxes (20%) profits for the year -2,464 9,856 And the following balance sheets for the same company: 31/12/2021 31/12/2020 PPE at cost 160,000 130,000 accumulated depreciation 95,000 75,000 PPE 65,000 55,000 current assets: inventories 5,670 34,500 12,340 receivables 23,670 4,000 15,746 prepaid rent cash 24,050 current liabilities: warranties provision 5,500 3,500 payables 42,000 45,600 non-current liabilities: bank loan 5,000 2,400 10% bond 10,000 10,000 equity: share capital retained profits 30,000 30,000 32,416 23,560 During 2021, the company paid dividends for £ 1,000 to shareholders. Taxes are paid in full on the last day of December. a) Prepare the cash flows statement for the year ended on 31/12/2021. What have been the main uses and sources of cash for the company during the year? [25 marks] b) Comment on the solvency and liquidity of the company using the ratios that you consider most appropriate. How have solvency and liquidity evolved in 2021? [10 marks] Consider the following income statement for the year ended on 31/12/2021 (all data expressed in £): sales revenue 154,300 cost of sales -73,600 gross profit 80,700 wages -23,560 administrative expenses -9,560 rent expenses -12,000 change in warranties provision depreciation -2,000 -20,000 operating profits interest expenses 13,580 -1,260 12,320 pre-tax profits taxes (20%) profits for the year -2,464 9,856 And the following balance sheets for the same company: 31/12/2021 31/12/2020 PPE at cost 160,000 130,000 accumulated depreciation 95,000 75,000 PPE 65,000 55,000 current assets: inventories 5,670 34,500 12,340 receivables 23,670 4,000 15,746 prepaid rent cash 24,050 current liabilities: warranties provision 5,500 3,500 payables 42,000 45,600 non-current liabilities: bank loan 5,000 2,400 10% bond 10,000 10,000 equity: share capital retained profits 30,000 30,000 32,416 23,560 During 2021, the company paid dividends for £ 1,000 to shareholders. Taxes are paid in full on the last day of December. a) Prepare the cash flows statement for the year ended on 31/12/2021. What have been the main uses and sources of cash for the company during the year? [25 marks] b) Comment on the solvency and liquidity of the company using the ratios that you consider most appropriate. How have solvency and liquidity evolved in 2021? [10 marks] Consider the following income statement for the year ended on 31/12/2021 (all data expressed in £): sales revenue 154,300 cost of sales -73,600 gross profit 80,700 wages -23,560 administrative expenses -9,560 rent expenses -12,000 change in warranties provision depreciation -2,000 -20,000 operating profits interest expenses 13,580 -1,260 12,320 pre-tax profits taxes (20%) profits for the year -2,464 9,856 And the following balance sheets for the same company: 31/12/2021 31/12/2020 PPE at cost 160,000 130,000 accumulated depreciation 95,000 75,000 PPE 65,000 55,000 current assets: inventories 5,670 34,500 12,340 receivables 23,670 4,000 15,746 prepaid rent cash 24,050 current liabilities: warranties provision 5,500 3,500 payables 42,000 45,600 non-current liabilities: bank loan 5,000 2,400 10% bond 10,000 10,000 equity: share capital retained profits 30,000 30,000 32,416 23,560 During 2021, the company paid dividends for £ 1,000 to shareholders. Taxes are paid in full on the last day of December. a) Prepare the cash flows statement for the year ended on 31/12/2021. What have been the main uses and sources of cash for the company during the year? [25 marks] b) Comment on the solvency and liquidity of the company using the ratios that you consider most appropriate. How have solvency and liquidity evolved in 2021? [10 marks]

Answer rating: 100% (QA)

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