Financial Statements

Dr Philip E Dunn has set some multiple choice questions on the interpretation of financial statements.

The following is a summary of the Financial Statements of Hawsker
Feeds Ltd for the Year Ended 31 December X20.

Statement of Profit or Loss

	£m
Revenue	6.80
Cost of Sales	4.00
Gross Profit	2.80
Distribution costs	1.00
Admin expenses	0.91
Profit from operations	0.89
Financial costs	0.08
Profit before tax	0.81
Taxation	0.24
Profit after tax	0.57

Additional information: cost of sales, distribution and admin expenses include: wages, salaries and employee costs £1.27m. Bought in materials and services £4.40m and depreciation £0.24m.

Number of Employees 35.

Statement of Financial Position

	£m
Non-Current Assets	3.95
Current Assets
Inventories	0.58
Receivables	1.18
Cash and Cash Equivalents	0.04
	1.80
Total Assets	5.75
Equity and Liabilities
Equity	3.67
Non-Current Liabilities	1.00
Current Liabilities
Trade Payables	0.84
Tax payable	0.24
	1.08
Total Liabilities	5.75

Tasks:

(1) Calculate the Return on Capital Employed:
(a) 12.00%
(b) 19.06%
(c) 17.05%
(d) 24.25%

(2) Calculate The Asset Turnover:
(a) 1.18
(b) 1.85
(c) 1.46
(d) 1.72

(3) Calculate the Operating Profit as a % of Turnover:
(a) 11.91%
(b) 41.18%
(c) 8.38%
(d) 13.09%

(4) Calculate the Current Ratio:
(a) 1.80:1
(b) 1.15:1
(c) 1.67:1
(d) 1.63:1

(5) Calculate the Acid Test (Quick Ratio):
(a) 1.67:1
(b) 1.13:1
(c) 1.53:1
(d) 1.63:1

(6) Calculate The Inventory holding period in days:
(a) 35.82 days
(b) 31.13 days
(c) 52.93 days
(d) 75.60 days

(7) Calculate the Trade Receivables’ collection period:
(a) 63.34 days
(b) 107.68 days
(c) 72.88 days
(d) 74.90 days

(8) Calculate Trade Payables’ payment period:
(a) 109.50 days
(b) 53.32 days
(c) 51.88 days
(d) 76.65 days

(9) Calculate the Interest Cover:
(a) 11.13
(b) 35
(c) 7.13
(d) 10.13

(10) Calculate the Gearing Ratio:
(a) 27.24%
(b) 21.05%
(c) 17.39%
(d) 21.41%

(11) Calculate the return on Shareholders’ Funds:
(a) 13.97%
(b) 21.21%
(c) 22.07%
(d) 15.53%

(12) Calculate Value Added per £ of Employee Costs:
(a) 4.21
(b) 1.89
(c) 2.70
(d) 0.86

(13) Calculate Value Added per Employee:
(a) £80,000
(b) £114,286
(c) £68,571
(d) 25,429