Instructions to students: All questions are compulsory
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TASK: BS1108 Introduction to Financial Accounting for Business Assignment
The following is the trial balance of Mars Ltd on 30th June 2013:
- The directors consider £14,000 of accounts receivable to be bad debt and should therefore be written off.
- The directors also propose to provide for doubtful debt at the rate of 5% of the Trade receivable balance at the year end
- A total amount of £28,000 relating to utility bills is outstanding and should be provided for.
- Inventory at 30th June 2013 was valued at £895,000.
- Corporation tax on profits at 30th June 2013 is estimated at £58,000.
- Both plant & machinery and fixtures and fittings are to be depreciated at an annual rate of 20% on a reducing balance basis.
- A dividend of 3 pence per ordinary shares is proposed to be paid
Prepare the following financial statements for Mars Ltd:
- a) Income statement for the year to 30th June 2013(20 marks)
- b) Statement of financial position (balance sheet) as at 30th June 2013(20 marks)(Total: 40 marks)
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Question 2: BS1108 Introduction to Financial Accounting for Business -City, University of London
Venus Ltd – Income Statement for the Year ending 31st Oct 2013
The company’s share price at 31st October 2013 was £2.30 and the total dividend for the year was 8 pence.
- Using the income statement and balance sheet of Venus Ltd, calculate the following ratios:
You must show the formula for each ratio you have calculated as well as the figures that you have used in each ratio calculation.
- Gross profit margin
- Net profit margin
- Return on Capital employed (ROCE)
- Asset turnover
- Current ratio
- Quick ratio (Acid test ratio)
- Trade receivable collection period (in days)
- Trade payable payment (in days)
- Inventory holding period (in days)
- Interest cover
- Gearing (debt/equity) ratio
- Earnings per share (EPS)
- Price Earnings (PE) ratio
- Dividend Yield
- Dividend cover(22 marks)
2.Briefly discuss the uses and limitations of ratio analysis in assessing a company’s financial position.(8 marks) (Total: 30 marks)