Balance sheet as at 31 March 2000
|
Fixed assets:
|
Sh.
|
Sh.
|
Sh.
|
|
Freehold property (Net book value)
Plant and machinery (Net book value)
Motor vehicles (Net book value)
Furniture and fittings (Net book value)
Current Assets:
Stocks
Debtors
Investments
Current liabilities:
Trade creditors
Bank overdraft
Corporation tax
Dividends payable
Financed by:
Authorised share capital - 800,000
Sh.1 ordinary shares
Issued and fully paid: 400,000 Sh.1 Ordinary shares
Capital reserve
Revenue reserve
Loan capital: 400,000 10% Sh.1 Debentures
|
238,400
878,400
176,000
107,200
|
1,000,000
400,000
120,000
1,500,000
(1,400,000)
|
480,000
800,000
200,000
200,000
1,680,000
120,000
1,800,000
400,000
200,000
800,000
400,000
1,800,000
|
Profit and loss account for the year ended 31 March 2000
|
Sh.
|
|
Sales (credit)
Profit after charging all expenses except interest on debentures
Less: debenture interest
Profit before tax
Corporation tax
Less: ordinary dividend proposed
Retained profit transferred to revenue reserve
|
4,000,000
440,000
40,000
400,000
176,000
224,000
107,200
116,800
|
The following additional information was available:
1. The purchases for the year were Sh.2,160,000 while the cost of sales was Sh.3,000,000.
2. The market price for Golden Times Ltd. Ordinary shares as at 31 March 2000 was Sh.5
3. The company estimates the current value of its freehold property at Sh.1,100,000.
Required:
(a) Compute the following ratios for Golden Times Ltd.:
•Return on capital employees
•The profit margin
•The turnover of capital
•Current ratio;
•Liquid ratio;
•Number of days accounts receivable are outstanding;
•Property ratio;
•Stock turnover ratio;
•Dividend yield ratio;
•Price earnings ratio.
(b) Comment on Golden Times Ltd. Liquidity stating the reference points to which relevant ratios can be compared.