Question 5

a)Explain the term ratio analysis (3marks)

b)Explain any five types of ratios, giving two examples under each(5marks)

c)explain why it is necessary to know the form business you intend to start. (7 marks)

GABA lake view limited presents to you the following financial statements for interpretation.The following income statement for the year ended 31st December 2012

	Shs	Shs
Sales		312,000
Less: Costs of Sales
Opening stock	28,600
Purchases	205,400
	234,000
Less: Closing stock	26,000	208,000
Gross profit on sales		104,000
Operating expenses
Office and admin	30,800
Selling and Distribution	38,880
Interest on debenture	3,120	72,800
Net profit before tax		31,200
Tax		7,800
Net profit after tax		23,400
Retained profits b/d		11,700
Retained profits c/d		35,100

Balance sheet as at 31st December 2012

	shs	shs	shs
Fixed Assets			104,000
Current Assets
Stock		26,000
Trade Debtors		13,000
Cash		14,300
		53,300
Less; Current Liabilities
Trade Creditors	18,200
Taxation payable	7,800	26,000	27,000
Net Assets			131,300
Financed by;
Share Capital			65,000
Retained Profits			35,100
Shareholders Funds			100,000
10% Debentures			31,200
Capital			131,300

d.Calculate any ten ratios from the above information (10 marks)

PLEASE WRITE ACCORDING TO THE MARKS GIVEN