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Ratio analysis - summary questions

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Question 1

Consider the accounts of Hope Ltd.

Hope Ltd - profit & loss account for year ended 31 December 2011


$000
Turnover 400
Gross profit 280
Net profit 120
Dividends 80


Hope Ltd - balance sheet as at 31 December 2011


$000 $000
Fixed assets 1,200
Current assets 620
Creditors (amounts falling due within one year) 310
Net current assets 310
Total assets less current liabilities 1,510
Creditors (amounts falling due after more than one year)
Debentures 560
950
Ordinary shares of $1 each 500
Reserves 250
950


Additional information:

  1. The value of closing stock as at 31 December 2011 was $250,000.
  2. The market price of an ordinary share on 31 December 2011 was $2.25.

From the above information, calculate the following ratios:

  • Gross profit margin
  • Net profit margin
  • Return on capital employed
  • Acid test
  • Current ratio
  • Dividend yield
  • Price earnings ratio
  • Gearing

Question 2

Consider the accounts of Harker Ltd.

Harker Ltd - profit & loss account for year ended 31 December 2011


$000
Turnover 320
Gross profit 195
Net profit 54
Dividends 26


Harker Ltd - balance sheet as at 31 December 2011


$000 $000
Fixed assets 420
Current assets 175
Creditors (amounts falling due within one year) 140
Net current assets 35
Total assets less current liabilities 455
Creditors (amounts falling due after more than one year)
Debentures 100
355
Ordinary shares of $1 each 280
Reserves 75
355


Additional information:

  1. The value of closing stock as at 31 December 2011 was $48,000.
  2. The market price of an ordinary share on 31 December 2011was $1.12.

From the above information, calculate the following ratios:

  • Gross profit margin
  • Net profit margin
  • Return on capital employed
  • Acid test
  • Current ratio
  • Dividend yield
  • Price earnings ratio
  • Gearing