The following financial statements relate to Charity plc:

Income statement (profit and loss account) for year ended 30 September Year4

Required

(a). Calculate ratios which measure:

(i). Liquidity and the use of working capital;

(ii). Management performance; and

(iii). Gearing.

(b). Explain how each ratio would help in understanding the financial position and results of the company.

(c). The market price of one share is 800 pence. Calculate ratios which will be of interest to investors.

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£000s Revenue 2,480 (1,100) 1,380 Cost of sales Gross profit Administration and selling expenses Operating profit (678) 702 Debenture interest (31) Profit before taxation 671 Taxation (154) Profit for equity holders 517