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m QUESTION 2 Chocco plc is a long-established chocolate and confectionery manufacturer. All products are manufactured in the UK, but sales are made worldwide. It is a growing but competitive market. Given below are extracts from their financial statements, Profit and Loss statement for the year ended 31" December 2020 2019 Em Revenue 6,738 6,441 Cost of sales 13.235) (3.096) Gross profit 3,503 3,345 Distribution costs (437) (422) Marketing and selling costs (1.324) (1,274) Administrative expenses 1937 1950) Operating profit 805 699 Profitloss on sale of fixed assets 19 (5) Investment Income 22 26 Interest payable (226) (181) Profit(loss) before taxation 620 539 Taxation (189) (173) Profit for the year 431 366 Statement of Financial Position as at 31 December 2019 Non-Current assets Intangible assets Property, plant and equipment Investments 2020 Em 5,485 1,613 335 7433 Em 5,809 1,605 318 7.732 Current assets Inventory Trade receivables Investments Cash 708 1,249 145 201 2 303 659 1,287 232 177 2.355 9.736 10.087 Total assets Current liabilities Trade payables Other creditors (655) (583) (1.928) 12.511) 12.391) 13.046) Non current liabilities Loans and other borrowings (4.137) (4.129) 3.088 2.912 Net assets 300 1,071 1.541 2.912 Equity Ordinary share capital (50p shares) 300 Share premium 1,071 Retained profits 1.717 3.088 Additional information: i. During 2020 a total dividend of 255m was paid (2019: 242m) ii. The average share price during 2020 was 5.12 (2019: 4.00). Required: Calculate the following ratios for Chocco plc for 2020 and 2019, showing the formulas and workings: a. 1- ROCE 2. ROE 3. Earnings par share 4. Net profit margin 5. Asset turnover 6- Stock holding days 7- Debtors collection period 8- Current ratio 9- Gearing ratio 10- Invertor cover (40 marks] b. Using the information in the financial statements and the ratios you have calculated, comment on the financial performance and position of Chocco plc. [10 marks]

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