Page 449 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Answers

CHAPTER 19 – ANALYSIS OF FINANCIAL PERFORMANCE AND
POSITION

Example 19.1

Profitability:

20X6 20X5
Gross profit Gross profit 287,450 = 638% 225/375 = 60%
margin Revenue

Operating profit Operating profit 87/450 = 19.3% 152/375 = 40.5%
margin Revenue

Return on capital Operating profit 87/(445 + 938 + 23 – 152/(250 + 275)
employed Capital employed 625) = 11.1% = 29%

20X6 20X5

EBITDA Earnings before interest, tax, 140 + 35 + 60 + 15 250
depreciation and amortisation
94 + 33 + 25 + 8 160

Liquidity ratios:
20X6 20X5
Current assets
Current ratio 161/111 = 1.5:1 126/81 = 1.6:1
Current liabilities

(Current assets-Inventory) (161 – 38)/111 = (126 – 30)/81 =
Quick ratio
Current liabilities 1.1:1 1.2:1

441