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20 marks
FR Section C · 20 marks · suggested: 36 min
Analysing performance and position (Holt Co)
Questions are in English, the exam language. Companies and figures are invented for practice.
Holt Co makes kitchen equipment. In October 20X9, three months before its year end of 31 December 20X9, it opened a new production facility financed by a $1,000,000 loan. During 20X9 it also offered longer credit terms to attract new trade customers.
| $000 | 20X9 | 20X8 |
|---|---|---|
| Revenue | 6,000 | 5,000 |
| Cost of sales | 4,500 | 3,500 |
| Gross profit | 1,500 | 1,500 |
| Profit from operations | 600 | 750 |
| Finance costs | 120 | 40 |
| Equity | 3,000 | 2,900 |
| Loans (non-current) | 1,500 | 500 |
| Inventory | 900 | 600 |
| Trade receivables | 1,000 | 600 |
| Trade payables | 700 | 650 |
| Cash / (overdraft) | (100) | 200 |
Use year-end figures. Capital employed = equity + non-current loans. Gearing = loans / equity. Use 365 days.
- (a) Gross profit margin 20X9 (%)1 marks
- (b) Operating profit margin 20X9 (%)1 marks
- (c) ROCE 20X9 (%, to 1 decimal)2 marks
- (d) Receivables collection period 20X9 (days, to 1 decimal)2 marks
- (e) Inventory holding period 20X9 (days, whole number)1 marks
- (f) Gearing 20X9 (%)1 marks
- (g) Interest cover 20X9 (times)1 marks
- (h) Comment on Holt Co's performance and financial position for 20X9 compared with 20X8.11 marks