Part 1
You have been asked by a local company to help put their profit and loss account into the proper format. The information you have been provided with is as follows:
Trading and profit and loss account items for the year ending 31 December 2003 (all figures in £000s)
|
Sales
|
4530
|
|
Loan interest
|
60
|
|
Closing stock
|
230
|
|
Distribution cost, including depreciation
|
150
|
|
Retained profit for the year
|
400
|
|
Gross profit
|
1380
|
|
Opening stock
|
360
|
|
Purchases
|
3020
|
|
Administrative costs, including depreciation
|
570
|
|
Cost of goods sold
|
3150
|
|
Rent and rates
|
200
|
|
Profit before interest
|
460
|
|
Balance sheet items at 31 December 2003 (all figures in £000s)
|
|
|
Vehicles, net of depreciation
|
280
|
|
Stock at 31 December 2003
|
230
|
|
Bank overdraft
|
182
|
|
Trade debtors
|
940
|
|
Trade creditors
|
425
|
|
Machinery and equipment, net of depreciation
|
185
|
|
Sundry debtors
|
60
|
|
Sundry creditors
|
40
|
|
Bank loan
|
500
|
|
Retained profit as at 31 December 2002
|
318
|
|
3000 shares at £100 each
|
300
|
|
Net profit for year to 31 December 2003
|
400
|
|
Cash
|
30
|
|
Premises
|
440
|
|
Shareholders' funds
|
1518
|
Part 2
Explain the meaning and significance of the following ratios that have been calculated from the financial information given in this question and for the previous year.
|
|
2003
|
2002
|
|
ROCE
|
30.3%
|
14.2
|
|
Current ratio
|
1.94:1
|
1.64:1
|
|
Debtor days
|
76 days
|
63 days
|
|
Creditor days
|
51 days
|
72 days
|