The following are extracts of the financial data of Wenalton Ltd for the financial years 2021...

  

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The following are extracts of the financial data of Wenalton Ltd for the financial years 2021 and 2022 Statement of Profit or Loss for the years ended 31 December 2021 and 2022 Sales revenue Cost of sales Gross profit Operating expenses Profit Non- current assets Other current assets Inventory Non- current liabilities Current liabilities Equity 2021 £ million 27532 NONNO 12.2 II) Quick (Acid Test) ratio iii) Capital gearing ratio iv) Return on capital employed v) Asset tumover 7.0 5.2 3.2 2.0 Extracts of the Statement of Financial Position as at 31 December 2021 and 2022 2021 £ million 343785 3.3 ALTNNW 2.4 2.3 1.7 1.8 2022 £ million 4.5 18.3 11.7 6.6 3.8 2.8 2022 £ million INNNNN 1151AN 7.1 2.1 2.5 2.1 2.4 7.2 Required: (a) Prepare the common-size statement of the statement of profit or loss (20 marks) (b) Calculate the following financial ratios (rounded to one decimal place); 1) Current ratio (30 marks) (c) Comment on the company's profitability, gearing, efficiency and liquidity over the two years 2021-2022). Use your answers in (a) and (b). (20 marks) Continued........... Question 2 (30 marks) (a) Identify and explain the two fundamental and any two enhancing qualitative characteristics of useful financial information according to the Conceptual Framework for financial reporting. (16 marks) (b) Discuss why these qualitative characteristics are useful in the preparation of the financial statements. Do provide examples to support your answer. (14 marks) The following are extracts of the financial data of Wenalton Ltd for the financial years 2021 and 2022 Statement of Profit or Loss for the years ended 31 December 2021 and 2022 Sales revenue Cost of sales Gross profit Operating expenses Profit Non- current assets Other current assets Inventory Non- current liabilities Current liabilities Equity 2021 £ million 27532 NONNO 12.2 II) Quick (Acid Test) ratio iii) Capital gearing ratio iv) Return on capital employed v) Asset tumover 7.0 5.2 3.2 2.0 Extracts of the Statement of Financial Position as at 31 December 2021 and 2022 2021 £ million 343785 3.3 ALTNNW 2.4 2.3 1.7 1.8 2022 £ million 4.5 18.3 11.7 6.6 3.8 2.8 2022 £ million INNNNN 1151AN 7.1 2.1 2.5 2.1 2.4 7.2 Required: (a) Prepare the common-size statement of the statement of profit or loss (20 marks) (b) Calculate the following financial ratios (rounded to one decimal place); 1) Current ratio (30 marks) (c) Comment on the company's profitability, gearing, efficiency and liquidity over the two years 2021-2022). Use your answers in (a) and (b). (20 marks) Continued........... Question 2 (30 marks) (a) Identify and explain the two fundamental and any two enhancing qualitative characteristics of useful financial information according to the Conceptual Framework for financial reporting. (16 marks) (b) Discuss why these qualitative characteristics are useful in the preparation of the financial statements. Do provide examples to support your answer. (14 marks)

Answer rating: 100% (QA)

a CommonSize Statement of Profit or Loss 2021 Sales Revenue 122 million 100 Cost of Sales 20 million 164 Gross Profit 102 million 836 Operating Expenses 38 million 311 Profit 64 million 525 2022 Sales ... View the full answer