Task:
Income Statement for year ended December 31, 2009
|
|
2009 |
2008 |
|
|
AED million |
AED million |
|
|
|
|
| Revenue |
|
1,130.4 |
1,043.6 |
| Cost of Sales* |
|
673.8 |
630.6 |
| Gross Profit |
|
456.6 |
413.0 |
| Administrative expenses |
|
158.4 |
129.8 |
| Distribution costs |
|
121.0 |
116.4 |
| Finance costs |
|
27.4 |
8.0 |
| Profit before tax |
|
149.8 |
158.8 |
| Tax |
|
35.0 |
36.2 |
| Profit after tax |
|
114.8 |
122.6 |
|
|
|
|
| ABC Group: Balance Sheet as at December 31, 2009 |
|
|
|
| Assets |
|
|
|
| Current Assets |
|
|
|
| Inventory |
|
213.4 |
104.8 |
| Receivables |
|
161.0 |
162.2 |
| Cash and cash equivalents |
|
8.6 |
18.6 |
| Total current assets |
|
383.0 |
285.6 |
|
|
|
|
| Non-current Assets (tangible and intangible) |
|
408.6 |
285.2 |
| Total assets |
|
791.6 |
570.8 |
| Stockholders Equity and Liabilities |
|
|
|
| Equity |
|
|
|
| Share Capital |
|
70.0 |
70.0 |
| Share Premium Account |
|
10.0 |
10.0 |
| Retained Earnings |
|
249.2 |
202.2 |
| Total equity |
|
329.2 |
282.2 |
| Non-current liabilities |
|
168.6 |
101.4 |
| Current liabilities |
|
|
|
| Payables |
|
197.8 |
147.0 |
| Tax payable |
|
22.4 |
24.4 |
| Overdraft |
|
73.6 |
15.8 |
| Total current liabilities |
|
293.8 |
187.2 |
| Total liabilities |
|
462.4 |
288.6 |
| Total equity and liabilities |
|
791.6 |
570.8 |
*Opening Inventory at 1, January 2007 was AED 95.6 million
Briefing Note Financial Statements - JUMBO GROUP
The JUMBO GROUP has traded successfully for a number of years.. The Finance Department of ABC is preparing draft financial statements for the year ended 31st December 2009 for review by the company's Board of Directors. The draft financial statements, including comparatives, are shown in Appendix A. The Finance Director expects the Board to focus upon ABC's financial performance and has asked you to prepare a briefing note containing the information that will be required:
Required:
Prepare a briefing note for the Finance Director of JUMBO GROUP that includes:
1. Calculation of following Ratios
a. Working Capital
b. Current and Quick Ratio
c. No of days Payable
d. No of days receivable.
- A short discussion of other factors that have impacted the JUMBO GROUP's funding and liquidity position
- Three limitations of ratio analysis that could be relevant in JUMBO GROUP's situation.