The financial statements of Bonny Terminals Ltd$,$ a gas supply company for the year

ended $31$ December $2021$ and $2020$ are below.

Statements of financial position

$20212020$

$$m $$m

Assets

Non$-$current assets

Property, plant, and equipment $330300$

Current assets

Inventories $9070$

Trade receivables $7050$

Cash $4030$

$200150$

Total assets $530450$

Liabilities and equity

Current liabilities

Trade payables $4538$

Taxation $4032$

Interest payable $3530$

$120100$

Non$-$current liabilities

Long$-$term loan @ $8\%150100$

Total liabilities $270200$

Equity

Share capital $200200$

Retained earnings $6050$

$260250$

Total liabilities and equity $530450$

Income statement of Bonny Terminals Ltd for the year ended $31$ December

$20212020$

$$m $$m

Revenue $550492$

Cost of sales $(410)(369)$

Gross profit $140123$

Distribution costs $(12)(12)$

Administrative expenses $(9)(10)$

Operating profit $119101$

Finance costs $(12)(8)$

Profit before tax $10793$

Corporate tax $(40)(32)$

Profit for the year $6761$

Additional information:

The company paid dividends of $57$ million in $2021$ and $50$ million in $2020$

respectively.

Required:

a$.$ Calculate the following ratios for $2021$ and $2020$

$1.$ Acid test $($Quick$)$ ratio

$2.$ Operating profit margin

$3.$ Return on capital employed

$4.$ Gearing

$5.$ Interest cover

$6.$ Asset turnover

$7.$ Inventory turnover

$8.$ Trade receivables days

$9.$ Trade payables days

$10.$ Dividend cover

b$.$ Comment on the performance of the business based on

the above ratios $10$ marks

c$.$ Discuss the limitations of using ratio as a tool of analysing

performance of a business $10$ marks

TOTAL: $30$ MARKSThe financial statements of Bonny Terminals Ltd$,$ a gas supply company for the year

ended $31$ December $2021$ and $2020$ are below.

Statements of financial position

$20212020$

$$m $$m

Assets

Non$-$current assets

Property, plant, and equipment $330300$

Current assets

Inventories $9070$

Trade receivables $7050$

Cash $4030$

$200150$

Total assets $530450$

Liabilities and equity

Current liabilities

Trade payables $4538$

Taxation $4032$

Interest payable $3530$

$120100$

Non$-$current liabilities

Long$-$term loan @ $8\%150100$

Total liabilities $270200$

Equity

Share capital $200200$

Retained earnings $6050$

$260250$

Total liabilities and equity $530450$

Income statement of Bonny Terminals Ltd for the year ended $31$ December

$20212020$

$$m $$m

Revenue $550492$

Cost of sales $(410)(369)$

Gross profit $140123$

Distribution costs $(12)(12)$

Administrative expenses $(9)(10)$

Operating profit $119101$

Finance costs $(12)(8)$

Profit before tax $10793$

Corporate tax $(40)(32)$

Profit for the year $6761$

Additional information:

The company paid dividends of $57$ million in $2021$ and $50$ million in $2020$

respectively.

Required:

a$.$ Calculate the following ratios for $2021$ and $2020$

$1.$ Acid test $($Quick$)$ ratio

$2.$ Operating profit margin

$3.$ Return on capital employed

$4.$ Gearing

$5.$ Interest cover

$6.$ Asset turnover

$7.$ Inventory turnover

$8.$ Trade receivables days

$9.$ Trade payables days

$10.$ Dividend cover

b$.$ Comment on the performance of the business based on

the above ratios $10$ marks

c$.$ Discuss the limitations of using ratio as a tool of analysing

performance of a business $10$ marks

TOTAL: $30$ MARKS

Answer rating: 100% (QA)

To calculate the ratios we first need to extract the relevant data from the financial statements pro... View the full answer