Please explain on answers

QUESTION 4

ABC Ltd is a listed company. Your client, Mr B, currently owns 300 shares in ABC. Mr B has recently received the published financial statements of ABC for the year ended 30 September 2019.

Extracts from these published financial statements, and other relevant information, are given below. Mr B is confused by the statements. He is unsure how the performance of the company during the year will affect the market value of his shares.

Statements of profit or loss year ended 30 September

	2019	2018
	$m	$m
Revenue	10,000	8,500
Cost of sales	(6,300)	(5,100)
Gross profit	3,700	3,400
Other operating expenses	(1,900)	(1,800)
Profit from operations	1,800	1,600
Finance costs	(300)	(320)
Profit before tax	1,500	1,280
Income tax expense	(470)	(400)
Profit for the year	1,030	880

Statements of financial position at 30 September

2019		2018
$m	$m	$m	$m

Non-current assets:

Tangible assets		4,000		3,700
Intangible assets		3,000		-----
		7,000		3,700

Current assets:

Inventories	1,300		1,000
Receivables	1,500		1,200
Cash in hand and at bank	100		90
		2,900		2,290
Total Assets		9,900		5,990

Equity:

Share capita		1,500		500
Share premium account		2,700		500
Retained earnings		900		670
		5,100		1,670

Non-current liabilities:

Loan notes	2,000		2,000
Current liabilities:
Trade payables	1,700		1,200
Taxation	500		420
Bank overdraft	600		700
Total Liabilities		4,800		4,320
Total equity and liabilities		9,900		5,990

Information regarding share capital:

The issued share capital of the company comprises $1 equity shares only. The market price of the shares is $3.50 per share.

Required:

Write a report commenting on the performance of the organisation over the past year