ork_project (1).docx als Help Normal BY V A EEEEEEE Comparator assembles computer equipment from bought in components and distributes them to various wholesalers and retailers. It has recently subscribed to an interfirm comparison service. Members submit accounting ratios as specified by the operator of the service, and in return, members receive the average figures for each of the specified ratios taken from all of the companies in the same sector that subscribe to the service. The specified ratios and the average figures for Comparator's sector are shown below. Ratios of companies reporting a full year's results for periods ending between 1 July 20x3 and 30 September 20X3 Return on capital employed 22.1% Net asset turnover 1.8 times 30% 12.5% Gross profit margin Net profit (before tax) margin Current ratio Quick ratio Inventory days 1.6:1 0.9:1 46 days Receivable's days 45 days 55 days AON Payable's days Debt to equity Dividend yield Dividend cover 3 times Comparator's financial statements for the year to 30 September 2010 are set out below - it Statement of profit or loss $000 Revenue 2,425 Cost of sales (1,870) Gross profit 555 Other operating expenses (215) Profit from operations 340 Finance costs (34) Exceptional item (note (1)) (120) Profit before taxation 186 Taxation (90) Profit for the year 96 = = = ii Notes: Extract of changes in equity: $000 Retained earnings - 1 October 20X2 179 Profit for the year 96 Dividends paid (interim $60,000; final $30,000) (90) Retained earnings - 30 September 20X3 185 Statement of financial position $000 $000 $000 Noncurrent assets 540 Current assets Inventory 275 Receivables 320 Bank nil ---- 595 1,135 Equity 150 Ordinary shares (25 cents each), 185 Retained earnings 335 Noncurrent liabilities 8% loan notes 300 Current liabilities Bank overdraft 65 Trade payables 350 Taxation 85 500 1,135 (i) The details of noncurrent assets are: Cost Accumulated Carrying Value depreciation $000 $000 $000 At 30 September 20X3 3,600 3,060 540 (ii) The exceptional item relates to losses on the sale of a batch of computers that had become worthless due to improvements in microchip design. (iii) The market price of Comparator's shares throughout the year averaged $6.00 each. Calculate the ratios for Comparator equivalent to those provided by the interfirm comparison service. (b) Write a report analysing the financial performance of Comparator based on a comparison with the sector averages. (25 marks) ork_project (1).docx als Help Normal BY V A EEEEEEE Comparator assembles computer equipment from bought in components and distributes them to various wholesalers and retailers. It has recently subscribed to an interfirm comparison service. Members submit accounting ratios as specified by the operator of the service, and in return, members receive the average figures for each of the specified ratios taken from all of the companies in the same sector that subscribe to the service. The specified ratios and the average figures for Comparator's sector are shown below. Ratios of companies reporting a full year's results for periods ending between 1 July 20x3 and 30 September 20X3 Return on capital employed 22.1% Net asset turnover 1.8 times 30% 12.5% Gross profit margin Net profit (before tax) margin Current ratio Quick ratio Inventory days 1.6:1 0.9:1 46 days Receivable's days 45 days 55 days AON Payable's days Debt to equity Dividend yield Dividend cover 3 times Comparator's financial statements for the year to 30 September 2010 are set out below - it Statement of profit or loss $000 Revenue 2,425 Cost of sales (1,870) Gross profit 555 Other operating expenses (215) Profit from operations 340 Finance costs (34) Exceptional item (note (1)) (120) Profit before taxation 186 Taxation (90) Profit for the year 96 = = = ii Notes: Extract of changes in equity: $000 Retained earnings - 1 October 20X2 179 Profit for the year 96 Dividends paid (interim $60,000; final $30,000) (90) Retained earnings - 30 September 20X3 185 Statement of financial position $000 $000 $000 Noncurrent assets 540 Current assets Inventory 275 Receivables 320 Bank nil ---- 595 1,135 Equity 150 Ordinary shares (25 cents each), 185 Retained earnings 335 Noncurrent liabilities 8% loan notes 300 Current liabilities Bank overdraft 65 Trade payables 350 Taxation 85 500 1,135 (i) The details of noncurrent assets are: Cost Accumulated Carrying Value depreciation $000 $000 $000 At 30 September 20X3 3,600 3,060 540 (ii) The exceptional item relates to losses on the sale of a batch of computers that had become worthless due to improvements in microchip design. (iii) The market price of Comparator's shares throughout the year averaged $6.00 each. Calculate the ratios for Comparator equivalent to those provided by the interfirm comparison service. (b) Write a report analysing the financial performance of Comparator based on a comparison with the sector averages. (25 marks)