Calculate liquidity and working capital ratios from the accounts of a manufacturer of products for the construction industry, and comment on the ratios.
|
|
20X8
|
20X7
|
|
$m
|
$m
|
|
Turnover
|
2,065.0
|
1,788.7
|
|
Cost of sales
|
1,478.6
|
1,304.0
|
|
Gross profit
|
586.4
|
484.7
|
|
Current assets
|
|
|
|
Inventories
|
119.0
|
109.0
|
|
Receivables (note 1)
|
400.9
|
347.4
|
|
Short-term investments
|
4.2
|
18.8
|
|
Cash at bank and in hand
|
48.2
|
48.0
|
|
|
572.3
|
523.2
|
|
Payables: amounts falling due within one year
|
20X8
|
20X7
|
|
Loans and overdrafts
|
49.1
|
35.3
|
|
Corporation taxes
|
62.0
|
46.7
|
|
Dividend
|
19.2
|
14.3
|
|
Payables (note 2)
|
370.7
|
324.0
|
|
|
501.0
|
420.3
|
|
Net current assets
|
$m71.3
|
$m102.9
|
|
Notes
|
|
|
|
1 Trade receivables
|
329.8
|
285.4
|
|
2 Trade payables
|
236.2
|
210.8
|