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Bengal is a public company. Its most recent financial statements are shown below:

STATEMENTS OF PROFIT OR LOSS FOR THE YEAR ENDED 31 MARCH

     20X1 20X0
     $'000 $'000
Revenue 25,500 17,250
Cost of sales (14,800) (10,350)
Gross profit 10,700 6,900
Distribution costs (2,700) (1,850)
Administrative expenses (2,100) (1,450)
Finance costs (650) (100)
Profit before taxation 5,250 3,500
Income tax expense (2,250) (1,000)
Profit for the year 3,000 2,500

 

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 

    20X1   20X0
    $'000   $'000 $'000    $'000
Non-current assets         
Property, plant and equipment   9,500   5,400
Intangibles   6,200           nil
    15,700   5,400
Current assets         
Inventory 3,600   1,800  
Trade receivables 2,400   1,400  
Bank         nil   4,000  
Non-current assets held for sale 2,000 8,000      nil 7,200
Total assets   23,700   12,600
       
Equity and liabilities         
Equity         
Equity shares of $1 each   5,000   5,000
Retained earnings   4,500   2,250
    9,500   7,250
Non-current liabilities        
5% loan notes   2,000   2,000
8% loan notes   7,000          nil
Current liabilities         
Bank overdraft 200         nil  
Trade payables 2,800   2,150  
Current tax payable 2,200 5,200 1,200 3,350
Total equity and liabilities   23,700   12,600

 

Additional information:

  1. There were no disposals of non-current assets during the period; however Bengal does have some noncurrent assets classified as 'held for sale' at 31 March 20X1. 
  2. Depreciation of property, plant and equipment for the year ended 31 March 20X1 was $640,000. 

A disappointed shareholder has observed that although revenue during the year has increased by 48% (8,250 / 17,250 × 100), profit for the year has only increased by 20% (500 / 2,500 × 100).

 

Requirements:

a

Comment on the performance (including addressing the shareholder's observation) and financial position of Bengal for the year ended 31 March 20X1. Up to five marks are available for the calculation of appropriate ratios.

 

Marks: 15
b

Explain the limitations of ratio analysis. 

Marks: 5

Answers submitted

Created by Ref Marking Action
Sajjad Hosen Pavel's picture
Sajjad Hosen Pavel
02/02/2021 - 21:52
a
10196
15
Kamrul Hasan's picture
Kamrul Hasan
09/06/2020 - 16:21
a
9638
15
Kamrul Hasan's picture
Kamrul Hasan
09/03/2020 - 18:07
b
9586
5
MD.Sabuj Sarker nil's picture
MD.Sabuj Sarker nil
08/13/2020 - 20:27
b
9378
5
Md. Mahmudul Hasan Shimul's picture
Md. Mahmudul Ha...
12/25/2019 - 20:20
a
8412
15
Md. Mahmudul Hasan Shimul's picture
Md. Mahmudul Ha...
12/25/2019 - 20:21
b
8414
5
Hassan Kanok Kanok's picture
Hassan Kanok Kanok
10/19/2019 - 18:57
a
7618
15
Lokonath Debnath's picture
Lokonath Debnath
10/19/2019 - 18:22
a
7606
15
Md Ishtiak Isty's picture
Md Ishtiak Isty
10/19/2019 - 19:00
a
7610
15
Md. Tariful Mursalin Rifat's picture
Md. Tariful Mur...
10/19/2019 - 18:58
a
7604
15
Pronob Kumer Shill's picture
Pronob Kumer Shill
10/19/2019 - 19:00
a
7614
15
Syed Tapu's picture
Syed Tapu
10/19/2019 - 18:57
a
7612
15
Ariful islam's picture
Ariful islam
05/29/2019 - 11:40
b
6480
5
Ariful islam's picture
Ariful islam
05/28/2019 - 22:27
a
6470
15
Md Fazlul Hoque Tauhid's picture
Md Fazlul Hoque...
05/27/2019 - 15:25
a
6436
15
Md Fazlul Hoque Tauhid's picture
Md Fazlul Hoque...
05/27/2019 - 15:42
b
6442
5
Md Kamrul Islam's picture
Md Kamrul Islam
05/09/2019 - 12:14
a
5886
15