PLEASE ANSWER GIVING EXPLANATIONS ON WORKINGS AND COMMENTS

An extract from XYZ Ltds Statement of Comprehensive Income for the year ended 30 April 2018 was as follows:

	$000	$000
Operating profit		1 000
Debenture interest (12.5%)		(250)
		750
Ordinary dividend paid and proposed	350
Preference dividend paid and proposed	120
Transfer to General Reserve	200	(670)
Retained profit for the year		80
XYZ Ltds issued share capital and reserves at 30 April 2018 consisted of
		$000
Ordinary shares of $10		4 000
8% Preference shares of $5		1500
Capital and revenue reserves		900
The market price of the ordinary shares at 30 April 2018 was $30.

REQUIRED

(a) Calculate the following ratios for XYZ Ltd.

(i) interest cover

(ii) dividend cover

(iii) earnings per share

(iv) price earnings ratio

(v) dividend yield

(vi) gearing

(b) Explain why each of the ratios in (a) is important for investors in ordinary shares in the company

XYZ Ltds accounting ratios at 30 April 2017 were as follows:

interest cover	5.5 times
dividend cover	2.5 times
price earnings ratio	22
gearing (calculated as a percentage of long term debentures and preference share capital to total long term capital)	36%

REQUIRED

(c) Compare the ratios for 2017 with the same ratios in 2018 as calculated in (a), and comment on the changes that you find.

(d) State, with reasons, any further information you might require and what other documents you might wish to see to enable you to assess the likely future performance of XYZ Ltd.