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TASK A

The statements of financial position of XZY PLC, a company trading as a wholesaler, as at 31st December 2020 and 2019 were as follows:

	2020		2019
	$ 000	$ 000	$ 000	$ 000
Assets
Non-current assets
Cost or valuation	374,800		287,600
Accumulated depreciation	(128,000)	246,800	(100,000)	187,600
Current assets
Inventories	35,000		24,000
Accounts trade receivable	30,000		21,000
Cash	4,000	69,000	2,800	47,800
Total Assets		315,800		235,400
Equity and liabilities
Ordinary shares of $1 each	120,000		100,000
Share premium account	16,000		2,000
Revaluation surplus	16,000
Retained earnings	46,500	198,500	28,000	130,000
Non- current liabilities
Loan		70,000		62,000
Current liabilities
Accounts trade payable	39,800		36,600
Taxation payable	7,500	47,300	6,800	43,400
Total equity and liabilities		315,800		235,400

The statements of profit or loss for the years ended 31st December 2020 and 2019 were:

	2020	2019
	$ 000	$ 000
Sales revenues	266,000	178,000
Cost of sales	(151,200)	(80,000)
Gross profit	114,800	98,000

Distribution costs (28,000) (30,000)

Administrative expenses	(40,000)	(36,000)
Operating Profit	46,800	32,000
Finance costs interest on loans	(7,000)	(7,000)
Profit before tax	39,800	25,000
Tax expense	(15,000)	(10,500)
Profit for the year	24,800	14,500

Task A - Question

You are required to:

A. Using the above financial statements and additional information of XYZ PLC, calculate appropriate ratios under the following listed categories:

1. i) Profitability Ratios

2. ii) Liquidity Ratios

iii) Gearing Ratios

(6 RATIOS x 0.5 MARKS=3 Marks)

B. Evaluate the performance and state the concerns of the key stakeholder groups using the ratios calculated above in (A). You are required to provide proper reasons which could cause the movement in the ratio figures of 2020 as compared to 2019 and also state suggestions for improvement wherever applicable.

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