APX Co achieved a revenue of $16 million in the year that has just ended and expects revenue growth of 8.4% in the next year.
The financial statements of APX Co for the year that has just ended contain the following statement of financial position:
$m | $m | |
---|---|---|
Non-current assets | 22.0 | |
Current assets | ||
Inventory | 2.4 | |
Receivables | 2.2 | |
4.6 | ||
Total assets | 26.6 | |
Equity finance: | $m | $m |
Ordinary shares | 5.0 | |
Reserve | 7.5 | |
12.5 | ||
Long-term bank loan | 10.0 | |
22.5 | ||
Current liabilities | ||
Trade payables | 1.9 | |
Overdraft | 2.2 | |
4.1 | ||
Total Equity and liabilities | 26.6 |
The long-term bank loan has a fixed annual interest rate of 8% per year. APX Co pays taxation at an annual rate of 30% per year.
The following accounting ratios have been forecast for the next year:
Gross profit margin: 30%
Operating profit margin: 20%
Dividend payout ratio: 50%
Inventory turnover period: 110 days
Trade receivables period: 65 days
Trade payables period: 75 days
Overdraft interest in the next year is forecast to be $140,000. No change is expected in the level of non-current assets and depreciation should be ignored.
Requirements:
Prepare a statement of profit or loss for the next year for APX Co using the information provided
Prepare a statement of financial position at the end of the next year for APX Co using the information above
Discuss the role of financial intermediaries in providing short-term finance for use by business organizations.
Answers submitted
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