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[solution]: Question 1 Financial statements of Nimbin Pty Ltd are presented


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Question 1

Financial statements of Nimbin Pty Ltd are presented below:

Nimbin P/L

Statement of Financial Position

As at 30 June 2015 and 2016

($000)

2016 2015

Current assets

Cash and cash equivalents $1,645 $2,110

Accounts receivables (all trades) 4,100 3,675

Inventories 7,000 6,930

______ _____

Total current assets 12,745 12,715

______ ______

Non-current assets

Property, plant and equipment 17,190 15,330

_______ ______

Total non-current assets 17,190 15,330

_______ _______

Total assets $29,935 $28,045

======= ======

Current liabilities

Payables $5,780 $5,990

_______ ______

Total current liabilities 5,780 5,990

_______ ______

Non-current liabilities

Interest-bearing liabilities 9,940 9,450

_______ _____

Total non-current liabilities 9,940 9,450

_______ _______

Total liabilities $15,720 $15,440

====== ======

Equity

Share capital $7,700 $7,700

Retained earnings 6,515 4,905

_______ _______

Total equity $14,215 $12,605

====== ======

Nimbin P/L

Income Statement

As at 30 June 2016

($000)

Revenues (net sales) $55,000

Less: cost of sales 35,100

_______

Gross profit 19,900

_______

Less: Expenses

Selling and distribution expenses 7,100

Administrative expenses 4,970

Finance costs 1,560

______

Total expenses 13,630

______

Profit before income tax 6,270

Income tax expense 1,908

______

Profit $4,362

=====

Nimbin P/L

Statement of changes in Equity

For the year ended 30 June 2016

($000)

Share capital

Ordinary (7,200.000 shares)

Balance at start of period $7,200

______

Balance at end of period 7,200

_______

Preference (250,000 shares)

Balance at start of period 500

______

Balance at end of period 500

______

Total share capital $7,700

======

Retained Earnings

Balance at start of period $4,905

Total income for the period 4,362

Dividends paid ? ordinary (2,702)

Dividends paid ? preference (50)

______

Balance at end of period $6,515

======

Additional information:

Payables include $5,620 (2016) and $5,730 (2015) trade accounts payable; the remainder is accrued expenses. Market prices of issued shares at year-end (2016): Ordinary $12; Preference $6.70.

Required:

  1. Calculate the following ratios for 2016. The industry average for similar businesses is shown.

Industry average

1. Rate of return on total assets 22%

2. Rate of return on ordinary equity 20%

3. Profit margin 4%

4. Earnings per share 45c

5. Price-earnings ratio 12.0

6. Dividend yield 5%

7. Dividend payout 70%

8. Current ratio 2.5:1

9. Quick ratio (acid ratio) 1.3:1

10. Receivables turnover 13

11. Inventory turnover 6

12. Debt ratio 40%

13. Times interest earned 6

14. Assets turnover 1.8


1 Rate of return on total assets

 

2 Rate of return on ordinary equity

 

3 Profit margin

 


 

=

 

=

 

=

 


 

4 Earning per share

 

5 Price earning ratio

 

6 Dividend yield

 


 

=

 

=

 

=

 


 

7 Dividend Payout

 

8 Current ratio

 


 

=...

 


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