Wholesaler companies, Grit Ltd. and Stone Ltd. are close competitors supplying concrete and stone aggregate to...

   

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Wholesaler companies, Grit Ltd. and Stone Ltd. are close competitors supplying concrete and stone aggregate to retail builder merchants. Table 1 shows extracts from each company's final accounts for the financial year ended 30th April 2020. Extracts from the Statements of Comprehensive Income for year ending 30th April 2020: Grit £'000 11,200 8,460 2,740 80 Sales Cost of Goods Sold Gross profit Depreciation Other overheads Profit before interest & tax Debenture interest Audit fees Net profit before tax Taxation Ordinary dividend Retained profit for year 2,168 492 40 12 440 140 65 235 Stone £'000 9,750 6,825 2,925 60 2,526 339 30 10 299 96 55 148 Statement of Financial Position as at 30th April 2020: Non-current (at cost less depreciation) assets Current Assets Inventory Accounts Receivable Cash Total current assets Total assets Capital Ordinary Shares (£1 each) Capital Reserves Total Capital Non-current liabilities 5% Debentures Current liabilities Bank Overdraft Accounts Payable Taxation Proposed dividends Total Capital and Liabilities £700,000 Stone: £850,000 Grit £000 £000 640 1,230 80 110 750 Additional information: 1. The value of inventory held on 1st May 2019 was: Grit: 2. All inventory is purchased on credit. 3. All sales are transacted on credit. 30 65 3. On 30 April 2020 the market share price was Grit £1.60 per share Stone: £1.50 per share £000 1.850 1.950 3,800 800 1,245 2,045 800 955 3,800 Stone £200 £000 490 1,080 120 80 690 20 55 £0.00 1,430 1.890 3,120 800 875 1,675 600 845 3,120 Calculate the following ratios for each company L. Return on capital employed (ROCE) (2 marks) ii. Gross profit margin (2 marks) Net profit margin (2 marks) iv. Volume of trade (2 marks) v. Acio test ratio (2 marks) vi Inventory turnover in days (2 marks) vi. Debtors (ie, trade receivables) collection period (2 marks) vil. Creditors (.e. trade payables) payment period (2 marks) ix. Price/Earnings (P/E) ratio (2 marks) x Gearing Ratio. (2 marks) Wholesaler companies, Grit Ltd. and Stone Ltd. are close competitors supplying concrete and stone aggregate to retail builder merchants. Table 1 shows extracts from each company's final accounts for the financial year ended 30th April 2020. Extracts from the Statements of Comprehensive Income for year ending 30th April 2020: Grit £'000 11,200 8,460 2,740 80 Sales Cost of Goods Sold Gross profit Depreciation Other overheads Profit before interest & tax Debenture interest Audit fees Net profit before tax Taxation Ordinary dividend Retained profit for year 2,168 492 40 12 440 140 65 235 Stone £'000 9,750 6,825 2,925 60 2,526 339 30 10 299 96 55 148 Statement of Financial Position as at 30th April 2020: Non-current (at cost less depreciation) assets Current Assets Inventory Accounts Receivable Cash Total current assets Total assets Capital Ordinary Shares (£1 each) Capital Reserves Total Capital Non-current liabilities 5% Debentures Current liabilities Bank Overdraft Accounts Payable Taxation Proposed dividends Total Capital and Liabilities £700,000 Stone: £850,000 Grit £000 £000 640 1,230 80 110 750 Additional information: 1. The value of inventory held on 1st May 2019 was: Grit: 2. All inventory is purchased on credit. 3. All sales are transacted on credit. 30 65 3. On 30 April 2020 the market share price was Grit £1.60 per share Stone: £1.50 per share £000 1.850 1.950 3,800 800 1,245 2,045 800 955 3,800 Stone £200 £000 490 1,080 120 80 690 20 55 £0.00 1,430 1.890 3,120 800 875 1,675 600 845 3,120 Calculate the following ratios for each company L. Return on capital employed (ROCE) (2 marks) ii. Gross profit margin (2 marks) Net profit margin (2 marks) iv. Volume of trade (2 marks) v. Acio test ratio (2 marks) vi Inventory turnover in days (2 marks) vi. Debtors (ie, trade receivables) collection period (2 marks) vil. Creditors (.e. trade payables) payment period (2 marks) ix. Price/Earnings (P/E) ratio (2 marks) x Gearing Ratio. (2 marks)

Answer rating: 100% (QA)

To calculate the listed financial ratios for each company Grit Ltd and Stone Ltd we can use the provided financial statements The formulas for each ratio are as follows I Return on Capital Employed RO... View the full answer