- 15 Marks
FR – MAY 2021 – L2 – Q4a – Performance Analysis
Analyze Zeus Ltd's performance and position from 2018 to 2020, including calculations.
Question
You are the Financial Controller of Konka Ltd. Zeus Ltd is a competitor in the same industry, and it has been operating for 20 years. Summaries of Zeus Ltd’s statements of profit or loss and financial position for the previous three years are given below.
Summarised Statement of Profit or Loss For the year ended 31 December
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Revenue | 840 | 981 | 913 |
| Cost of sales | (554) | (645) | (590) |
| Gross profit | 286 | 336 | 323 |
| Administration and selling expenses | (186) | (214) | (219) |
| Profit before interest and taxes | 100 | 122 | 104 |
| Finance cost | (6) | (15) | (19) |
| Profit before taxation | 94 | 107 | 85 |
| Taxation | (45) | (52) | (45) |
| Profit after taxation | 49 | 55 | 40 |
| Dividends | 24 | 24 | 24 |
Summarised Statement of Financial Position as at 31 December
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Intangible assets | 36 | 40 | 48 |
| Tangible assets at net book value | 176 | 206 | 216 |
| Total Non-current assets | 212 | 246 | 264 |
| Current assets | |||
| Inventories | 237 | 303 | 294 |
| Receivables | 105 | 141 | 160 |
| Bank | 52 | 58 | 52 |
| Total Current Assets | 394 | 502 | 506 |
| Total Assets | 606 | 748 | 770 |
| Equity and Liabilities | |||
| Equity | |||
| Stated capital | 100 | 100 | 100 |
| Retained earnings | 299 | 330 | 346 |
| Total Equity | 399 | 430 | 446 |
| Non-current liabilities | |||
| Long-term loans | 74 | 138 | 138 |
| Current liabilities | |||
| Trade payables | 53 | 75 | 75 |
| Other payables | 80 | 105 | 111 |
| Total Current Liabilities | 133 | 180 | 186 |
| Total Equity and Liabilities | 606 | 748 | 770 |
Required:
a) Analyzing the performance and position of Zeus Ltd and showing any calculations in an appendix to this report.
(15 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Liquidity, Operating Efficiency, Performance Analysis, Profitability, Solvency
- Level: Level 2
- Topic: Financial Statement Analysis
- Series: MAY 2021
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