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information from proti Question foro income ta Cygnus ple company that wholesales non-electrical office equipment. The comparty has only one whouse and has requested a bom loon of more year fotografe) aterest rate of 12% per annum in order to purchase computer prent to main Inventory and other records The Bo onvent Cygnus revenue increased by 99% during the last financial year. The equipment will not materially change the company's current average percentage A the year paid in the ye statements for Cygnus follow wative ratio in Balance Sheet as at 31 March 2020 2000 2011 amnings Ratio Ratio (95) Ratio est Ratio E000 Non-current assets Property, plant & equipment 15.080 1422 on Capital En ng Margin ( 31.540 2180 shares a Current assets Inventories Receivables Investment Cash and cash equivalents 24220 17 340 8.760 10.060 1.700 85320 59279 B2.390 64.699 Required: You Cygn DOSS Current liabilities Overdraft Trade payables Current taxation 16,340 13,220 20.920 15.280 2.420 2,800 39.680 31.300 Non-current liabilities Long-term borrowings Debentures 2 3 4 5 6 6,000 16,000 16.000 22.000 16000 Share capital and reserves Equity share 10 p each (38 million shares) Retained profit Total equity 3,800 3,800 16,900 13,500 20,700 17.300) Pre 82 380 64.600 cal ter 10 UL20/0369 Page 6 of 10 mation from the Income Statement for year to 31 March por E000 99.360 10,760 (3.840) 6,920 (2.420) 4.500 1.100 equipment. The 6 million tive purchase new The computer centage return ncial year. The e income tax the year in the year ove ratio information for Cygnus' Industry (averages angs Ratio 2020 E'000 2019 20 (95) E000 Ratio 16.060 14,390 y Capital Employed (26) 2020 20 52.4 1:1 1:1 16.5 9.0 Ratio Margin(%) 1,640 21.8805 shares are currently traded at 15.0 p. 4,220 17,340 8,760 10.060 1,700 3.320 50.229 2.380 64.600) -420 960 Required: You are a consultant for Cygnus plc. Calculate the following ratios for Cygnus for the financial years ended 31 March 2019 and 2020 where .340 13.220 possible: 1920 15 280 2,800 1. Return on Capital Employed 680 31300 2. Operating Margin 3. Current Ratio 000 4. Acid Test Ratio 200 16.000 5. Inventory Holding Period 300 16.00 6. Creditors Payment Period 7. Gearing Ratio 300 3,800 8. Price Earnings Ratio (15 marks) 00 13,500 00 17,300 80 64.60Prepare a short report (with five meaningful comments) based on ratios calculated for part a) to present to Cygnus' directors in support of the new term loan. Use industry averages as benchmarks for your analysis whenever possible (5 marks) [Total: 20 Marks) 00369 Page 7 of 10 Question 4 Cygnus ple is a company that wholesales non-electrical office equipment. The company has only one warehouse and has requested a term loan of 6 million (five-year floating rate) at an initial interest rate of 12% per annum in order to purchase new computer equipment to maintain its inventory and other records. The computer equipment will not materially change the company's current average percentage return on investment, Cygnus revenue increased by 9% during the last financial year. The financial statements for Cygnus are as follows: Balance Sheet as at 31 March 2020 L'000 2019 L'000 16,060 14,380 Non-current annet Property, plant & equipment Current assets Inventories Receivables Investment Cash and cash equivalents 31,640 21,860 24.220 17,340 8,760 10.060 1,700 960 66,320 50,220 82,380 64,000 Current liabilities Overdraft Trade payables Current taxation Non-current liabilities Long-term borrowings Debentures 16,340 13,220 20.920 15,280 2,420 2.800 39,680 31,300 6,000 16,000 16.000 22,000 16,000 Share capital and reserves Equity share 10 p each (38 million shares) Retained profit Total equity 3,800 3,800 16,900 13,500 20,700 17,300 82,380 64.600 Extract information from the Income Statement for yoar to 31 March 2020 Revenue Operating profit Finance costs Profit before income tax Income tax Profit for the year Dividend paid in the year L'000 99,360 10,760 (3,840) 6,920 (2,420) 4,500 1,100 2020 Comparative ratio information for Cygnus industry (averages) Price Earnings Ratio Gearing Ratio % Current Ratio Acid Test Ratio Return on Capital Employed (%) Operating Margin (%) Cygnus shares are currently traded at 15.0 p. 52.4 1:1 1:1 16.5 3.0 10 Examiners' commentaries 2020 Required: (a) You are a consultant for Cygnus plc. Calculate the following ratios for Cygnus for the financial years ended 31 March 2019 and 2020 where possible: 1. Return on Capital Employed 2. Operating Margin 3. Current Ratio 4. Acid Test Ratio 5. Inventory Holding Period 6. Creditors Payment Period 7. Gearing Ratio 8. Price Earnings Ratio (15 marks) (b) Prepare a short report (with five meaningful comments) based on ratios calculated for part (a) to present to Cygnus' directors in support of the new term loan. Uso industry averages as benchmarks for your analysis whenever possible. (5 marks) (Total: 20 marks)