Question Tag: Performance Analysis

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CR – Nov 2016 – L1 – SB – Q3 – Segment Reporting (IFRS 8)

Perform a vertical analysis of segment contributions to the group's financial performance.

Question

Nationwide Plc is a conglomerate with subsidiaries in two geographical locations. Each of the subsidiaries has stamped its foot in relevant subsectors and contributes to the group’s gross earnings. Segment information is prepared on the basis of geographical areas as well as business lines.

Segment Information By Geographical Areas as at December 31, 2012:

Subsidiary I	Nigeria (N’m)	Europe (N’m)	Total (N’m)
Derived From External Customers	110,419	2,375	112,794
Total Revenue	110,419	2,375	112,794
Interest And Similar Expenses	(25,398)	(271)	(25,669)
Operating Income	85,021	2,104	87,125
Share Of Profit Of Equity Accounted Investee	1,850	0	1,850
Operating Expenses	(75,507)	(1,530)	(77,037)
Net Impairment Loss On Financial Assets	(2,772)	(106)	(2,878)
Profit Before Taxation	8,592	468	9,060
Income Tax Credit/(Expense)	(1,572)	(113)	(1,685)
Profit After Taxation	7,020	355	7,375

Assets And Liabilities:

Subsidiary I	Nigeria (N’m)	Europe (N’m)	Total (N’m)
Total Assets	954,165	78,882	1,033,047
Total Liabilities	(781,019)	(57,630)	(838,649)
Net Assets	173,146	21,252	194,398

Subsidiary II	Nigeria (N’m)	Europe (N’m)	Total (N’m)
Derived From External Customers	82,566	2,535	85,101
Total Revenue	82,566	2,535	85,101
Interest And Similar Expenses	(34,049)	(263)	(34,312)
Operating Income	48,517	2,272	50,789
Share Of Profit Of Equity Accounted Investee	952	0	952
Operating Expenses	(88,429)	(1,468)	(89,897)
Net Impairment Loss On Financial Assets	(69,525)	(3)	(69,528)
Profit/(Loss) Before Taxation	(108,485)	801	(107,684)
Income Tax Credit/(Expense)	25,346	(213)	25,133
Profit/(Loss) After Taxation	(83,139)	588	(82,551)

Assets And Liabilities:

Subsidiary II	Nigeria (N’m)	Europe (N’m)	Total (N’m)
Total Assets	899,434	155,300	1,054,734
Total Liabilities	(711,678)	(143,684)	(855,362)
Net Assets	187,756	11,616	199,372

Required:
You are required to appraise the contributions of each of the geographical locations to the group’s performance through a vertical analysis from the segment information.

Answer

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Tags: Geographical Contributions, Group Financials, Performance Analysis, Segment Information, Vertical Analysis
Level: Level 3

Topic: Segment Reporting (IFRS 8)
Series: NOV 2016

FR – May 2024 – L2 – SB – Q3 – Regulatory Framework for Financial Reporting

Calculation of financial ratios and analysis of Lamido Ltd’s financial performance and position for the year ended December 31, 2022.

Question

Lamido Limited is a courier service company that operates in Nigeria and West Africa.

Initially, Lamido Limited experienced strong growth, but in recent periods the company has been criticised for under-investing in its non-current assets.

Lamido Limited statement of financial position as at December 31:

The following information is also relevant:

Lamido Limited had exactly the same delivery volumes in 2022 as in 2021, with the customer base being the same in both years.
In October 2022, Lamido Limited had to renegotiate its operating licenses in three of its countries of operation. This led to an increase in the fees Lamido Limited had to pay to operate in these countries. The operating licenses in five other countries are due to expire in December 2022, and Lamido Limited is currently negotiating with the concerned authorities of these countries.

You are required to:
a. Calculate the following ratios for the years ended December 31, 2021, and 2022:
i. Operating profit margin
ii. Return on capital employed
iii. Net asset turnover
iv. Current ratio
v. Interest cover
vi. Gearing (Debt/equity)
(6 Marks)

b. Comment on the performance and position of Lamido Limited for the year ended December 31, 2022, and highlight any issues Lamido Limited should consider in the near future. (14 Marks)

Answer

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Tags: Financial Ratios, Liquidity, Performance Analysis, Profitability
Level: Level 2

Topic: Regulatory Framework for Financial Reporting
Series: MAY 2024

FR – Nov 2021 – L2 – Q4 – Presentation of Financial Statements (IAS 1)

Calculate and analyze financial ratios for Onye Nigeria Plc for the years 2019 and 2020.

Question

Below are the statements of financial position of Onye Nigeria Plc as at October 31, 2020, and an extract from the statement of profit or loss for the year ended on that date.

Onye Nigeria Plc
Statement of Financial Position as at October 31, 2020

Item	2020 (N’000)	2019 (N’000)
Non-current assets
Property, plant and equipment	8,325	6,435
Current assets
Inventories	2,880	2,205
Trade receivables	5,535	4,860
Cash and bank	360	540
Total Assets	17,100	14,040
Equity and Liabilities
Equity
Ordinary share capital	3,600	3,600
Retained earnings	5,603	3,938
Non-current liabilities
10% loan notes	3,600	2,700
Current liabilities
Trade payables	3,375	3,105
Bank overdraft	495	360
Taxation	135	90
Accrued expenses	292	247
Total Equity and Liabilities	17,100	14,040

Onye Nigeria Plc
Extracts from Statement of Profit or Loss for the Year Ended October 31

Item	2020 (N’000)	2019 (N’000)
Revenue	50,400	43,875
Cost of sales	(38,070)	(30,713)
Profit before taxation	2,093	1,440

Additional information:

The profit before tax is after charging:

Item 2020 (N’000) 2019 (N’000)

Depreciation 1,620 1,620

Interest on loan note 360 270

Interest on bank overdraft 68 41

Audit fees 54 45

Item	2020 (N’000)	2019 (N’000)
Depreciation	1,620	1,620
Interest on loan note	360	270
Interest on bank overdraft	68	41
Audit fees	54	45

The latest industry average ratios are as follows:

Ratio	Industry Average
ROCE	18.50%
Net profit margin	4.73%
Gross profit margin	35.23%
Assets turnover	3.91 times
Current ratio	1.90:1
Quick ratio	1.27:1
Trade receivables period	52 days
Trade payables period	49 days
Inventory turnover	18.30 times
Gearing ratio	32.71%

Required:
a. Calculate the above ratios of Onye Nigeria Plc for the years 2019 and 2020. (10 Marks)
b. Analyze the performance and liquidity of Onye Nigeria Plc for the year 2020. (5 Marks)
c. Comment on the limitations of using accounting ratios in financial statement analysis. (5 Marks)

Answer

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Tags: Current Ratio, Financial Ratios, Net Profit Margin, Performance Analysis, ROCE
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)
Series: NOV 2021

CR – May 2020 – Q5 – Financial Performance and Position of Bossman Ltd

This question involves analyzing the financial performance and position of Bossman Ltd over three years using ratio analysis.

Question

Answer

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Tags: Financial Analysis, Liquidity, Performance Analysis, Profitability, Solvency
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: MAY 2020

FR – Dec 2022 – L2 – Q4 – Financial Analysis & Ratios

Analyze and compare Madina Ltd.’s performance using key financial ratios for the years 2020 and 2021, including comparisons with industry standards.

Question

Madina Ltd is engaged in the processing of palm fruits to produce palm oil and palm kernel oil. The financial statements of the company for the years ended 31st December 2020 and 2021 are as follows:

Statement of Profit or Loss for the year ended

Description	2021 (GH¢’000)	2020 (GH¢’000)
Revenue	123,817	95,620
Cost of sales	(84,940)	(76,240)
Net gains from changes in fair value of biological assets	84	754
Gross profit	38,961	20,134
Administrative expenses	(11,727)	(8,494)
Other income	1,267	927
Operating profit	28,501	12,567
Finance income	888	508
Profit before income tax	29,389	13,075
Income tax expense	(4,692)	(3,422)
Profit for the year	24,697	9,653

Statement of Financial Position as at:

Description	2021 (GH¢’000)	2020 (GH¢’000)
Non-current assets
Property, Plant & Equipment	57,909	49,471
Financial assets	5,221	5,137
Current assets
Inventories	8,490	9,370
Trade Receivables	24,663	18,304
Cash and cash equivalents	22,832	10,618
Total Assets	119,115	92,900

The following ratios have been gathered from the food and processing industry for the year ended 31 December 2021:

Return on Equity (%) 23.52
Gross Profit Margin (%) 29.57
Net Profit Margin (%) 22.16
Current Ratio (times) 2.5
Acid Test Ratio (times) 1.8
Inventory Turnover (days) 20
Trade Receivables Collection (days) 68
Trade Payables Settlement (days) 32

Required:
Write a report to the Board of Directors of Madina Ltd, assessing the company’s performance for the year ended 31 December 2021 in relation to the industry and the comparative year.

Answer

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Tags: Financial Ratios, Liquidity, Performance Analysis, Profitability
Level: Level 2

Topic: Financial Statement Analysis
Series: DEC 2022

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)

Answer

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Tags: Liquidity, Operating Efficiency, Performance Analysis, Profitability, Solvency
Level: Level 2

Topic: Financial Statement Analysis
Series: MAY 2021

FR – MAY 2021 – L2 – Q4b – Areas Requiring Further Investigation

Identify five areas needing further investigation regarding Zeus Ltd's performance.

Question

Summarising FIVE (5) areas that require further investigation, including reference to other pieces of information which would complement your analysis of the performance of Zeus Ltd.

Answer

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Tags: Accounting Policies, Corporate Governance, Financial Reporting, Investigation, Performance Analysis
Level: Level 2

Topic: Financial Statement Analysis
Series: MAY 2021

FR – July 2023 – L2 – Q4 – Performance Analysis

Assess the financial performance of Besease Ltd using financial ratios and prepare a report for the board of directors.

Question

Besease Ltd won two prestigious awards in 2020 despite the negative impact of the COVID-19 pandemic. The Board of Directors seeks to assess the company’s performance for the year ended 31 December 2021 in comparison to 2020.

Below are the financial statements for the year ended 31 December 2021:

Statement of comprehensive income for the year ended 31 December

	2021 (GH¢)	2020 (GH¢)
Revenue	7,315,927	6,184,754
Cost of sales	(4,322,986)	(3,441,339)
Gross profit	2,992,941	2,743,415
Other income	330,812	280,832
Administrative expenses	(2,511,179)	(2,648,987)
Operating profit	812,574	375,260
Finance cost	(496,913)	(174,872)
Profit before tax	315,661	200,388
Taxation	(188,621)	(30,700)
Profit for the year	127,040	169,688

Statement of financial position as at 31 December

	2021 (GH¢)	2020 (GH¢)
Non-current assets
Property, Plant & Equipment	9,224,988	5,102,799
Intangible assets	35,824	33,350
Investments	36,629	36,629
Total non-current assets	9,297,441	5,172,778
Current assets
Inventories	2,878,337	1,329,279
Trade receivables	1,875,594	2,246,747
Cash and bank balances	527,412	372,081
Total current assets	5,281,343	3,948,107
Total assets	14,578,784	9,120,885
Equity & Liabilities
Equity
Share capital	217,467	217,467
Retained earnings	1,289,140	1,162,100
Credit reserve	826,528	1,102,037
Total equity	2,333,135	2,481,604
Non-current liabilities
Interest-bearing loans	6,708,598	2,800,223
Deferred taxation	187,624	186,304
Total non-current liabilities	6,896,222	2,986,527
Current liabilities
Trade payables	1,257,693	1,550,466
Taxation	118,337	101,391
Other payables	2,993,667	1,021,167
Accrued expenses	979,730	979,730
Total current liabilities	5,349,427	3,652,754
Total equity & liabilities	14,578,784	9,120,885

The Finance Manager has selected the following performance ratios:
i) Return on capital employed (capital employed = interest-bearing debt + shareholders’ equity) (%)
ii) Return on equity (%)
iii) Acid test ratio (times)
iv) Debt-to-equity ratio
v) Interest cover ratio (times)

Required:
Write a report to the Board of Directors assessing the comparative performance of Besease Ltd for the year ended 31 December 2021 using the given ratios.

Answer

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Tags: Efficiency, Financial Ratios, Gearing, Liquidity, Performance Analysis, Profitability
Level: Level 2

Topic: Performance analysis
Series: JULY 2023

FR – Nov 2021 – L2 – Q4 -Financial Statement Analysis

Analysis of financial ratios and performance of Bebebe Ltd for 2019 and 2020.

Question

The following are the accounts of Bebebe Ltd (Bebebe), a company that manufactures playground equipment for the year ended 30 November 2020.

Statement of Comprehensive Income for the year ended 30 November:

Required:

a) Calculate, for both years, the return on equity and the return on capital employed. (4 marks)

b) Calculate, for both years, TWO (2) investment ratios to a potential investor. (4 marks)

c) Calculate, for both years, TWO (2) ratios of interest to a potential long-term lender. (4 marks)

d) Comment on the performance of Bebebe to a potential shareholder and lender using the ratios calculated above. (5 marks)

e) Explain THREE (3) weaknesses in these ratios.

(3 marks)

Answer

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Tags: Financial Ratios, Investment Ratios, Lender Ratios, Performance Analysis, Return on Capital Employed, Return on Equity
Level: Level 2

Topic: Financial Statement Analysis
Series: NOV 2021

CR – Aug 2022 – L3 – Q5 – Analysis and interpretation of financial statements

This question requires writing a report that assesses the comparative performance of a company using various financial ratios (profitability, liquidity, efficiency, and gearing).

Question

Wadie Ltd has been in operation for the past ten years. The company started operations in Kumasi with just three employees, but currently operates in all regions of Ghana, with over five hundred employees.

The final meeting for the year of the Board of Directors of the company is to be convened, and as a tradition, the Finance Manager presented an analysis of the financial performance of the company for the financial year ended 31 December 2021. Below are the financial statements for the year ended 31 December 2021:

Statement of Comprehensive Income for the year 31 December

Additional Information:

i) Finance income relates to interest earned on the company’s investment in Government of Ghana loan notes.

ii) Dividend payable represents the dividend declared or approved by shareholders at the last Annual General Meeting.

Required:

As the Finance Manager of the company, write a report to the Board of Directors, assessing the comparative performance of the company for the year ended 31 December 2021. Your report should use THREE (3) profitability ratios, TWO (2) liquidity ratios, THREE (3) efficiency ratios, and TWO (2) gearing ratios.

Answer

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Tags: Efficiency, Financial Ratios, Gearing, Liquidity, Performance Analysis, Profitability
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: AUG 2022

CR – Nov 2016 – L1 – SB – Q3 – Segment Reporting (IFRS 8)

Perform a vertical analysis of segment contributions to the group's financial performance.

Question

Segment Information By Geographical Areas as at December 31, 2012:

Subsidiary I	Nigeria (N’m)	Europe (N’m)	Total (N’m)
Derived From External Customers	110,419	2,375	112,794
Total Revenue	110,419	2,375	112,794
Interest And Similar Expenses	(25,398)	(271)	(25,669)
Operating Income	85,021	2,104	87,125
Share Of Profit Of Equity Accounted Investee	1,850	0	1,850
Operating Expenses	(75,507)	(1,530)	(77,037)
Net Impairment Loss On Financial Assets	(2,772)	(106)	(2,878)
Profit Before Taxation	8,592	468	9,060
Income Tax Credit/(Expense)	(1,572)	(113)	(1,685)
Profit After Taxation	7,020	355	7,375

Assets And Liabilities:

Subsidiary I	Nigeria (N’m)	Europe (N’m)	Total (N’m)
Total Assets	954,165	78,882	1,033,047
Total Liabilities	(781,019)	(57,630)	(838,649)
Net Assets	173,146	21,252	194,398

Subsidiary II	Nigeria (N’m)	Europe (N’m)	Total (N’m)
Derived From External Customers	82,566	2,535	85,101
Total Revenue	82,566	2,535	85,101
Interest And Similar Expenses	(34,049)	(263)	(34,312)
Operating Income	48,517	2,272	50,789
Share Of Profit Of Equity Accounted Investee	952	0	952
Operating Expenses	(88,429)	(1,468)	(89,897)
Net Impairment Loss On Financial Assets	(69,525)	(3)	(69,528)
Profit/(Loss) Before Taxation	(108,485)	801	(107,684)
Income Tax Credit/(Expense)	25,346	(213)	25,133
Profit/(Loss) After Taxation	(83,139)	588	(82,551)

Assets And Liabilities:

Subsidiary II	Nigeria (N’m)	Europe (N’m)	Total (N’m)
Total Assets	899,434	155,300	1,054,734
Total Liabilities	(711,678)	(143,684)	(855,362)
Net Assets	187,756	11,616	199,372

Required:
You are required to appraise the contributions of each of the geographical locations to the group’s performance through a vertical analysis from the segment information.

Answer

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Tags: Geographical Contributions, Group Financials, Performance Analysis, Segment Information, Vertical Analysis
Level: Level 3

Topic: Segment Reporting (IFRS 8)
Series: NOV 2016

FR – May 2024 – L2 – SB – Q3 – Regulatory Framework for Financial Reporting

Calculation of financial ratios and analysis of Lamido Ltd’s financial performance and position for the year ended December 31, 2022.

Question

Lamido Limited is a courier service company that operates in Nigeria and West Africa.

Initially, Lamido Limited experienced strong growth, but in recent periods the company has been criticised for under-investing in its non-current assets.

Lamido Limited statement of financial position as at December 31:

The following information is also relevant:

Lamido Limited had exactly the same delivery volumes in 2022 as in 2021, with the customer base being the same in both years.
In October 2022, Lamido Limited had to renegotiate its operating licenses in three of its countries of operation. This led to an increase in the fees Lamido Limited had to pay to operate in these countries. The operating licenses in five other countries are due to expire in December 2022, and Lamido Limited is currently negotiating with the concerned authorities of these countries.

b. Comment on the performance and position of Lamido Limited for the year ended December 31, 2022, and highlight any issues Lamido Limited should consider in the near future. (14 Marks)

Answer

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Tags: Financial Ratios, Liquidity, Performance Analysis, Profitability
Level: Level 2

Topic: Regulatory Framework for Financial Reporting
Series: MAY 2024

FR – Nov 2021 – L2 – Q4 – Presentation of Financial Statements (IAS 1)

Calculate and analyze financial ratios for Onye Nigeria Plc for the years 2019 and 2020.

Question

Below are the statements of financial position of Onye Nigeria Plc as at October 31, 2020, and an extract from the statement of profit or loss for the year ended on that date.

Onye Nigeria Plc
Statement of Financial Position as at October 31, 2020

Item	2020 (N’000)	2019 (N’000)
Non-current assets
Property, plant and equipment	8,325	6,435
Current assets
Inventories	2,880	2,205
Trade receivables	5,535	4,860
Cash and bank	360	540
Total Assets	17,100	14,040
Equity and Liabilities
Equity
Ordinary share capital	3,600	3,600
Retained earnings	5,603	3,938
Non-current liabilities
10% loan notes	3,600	2,700
Current liabilities
Trade payables	3,375	3,105
Bank overdraft	495	360
Taxation	135	90
Accrued expenses	292	247
Total Equity and Liabilities	17,100	14,040

Onye Nigeria Plc
Extracts from Statement of Profit or Loss for the Year Ended October 31

Item	2020 (N’000)	2019 (N’000)
Revenue	50,400	43,875
Cost of sales	(38,070)	(30,713)
Profit before taxation	2,093	1,440

Additional information:

The profit before tax is after charging:

Item 2020 (N’000) 2019 (N’000)

Depreciation 1,620 1,620

Interest on loan note 360 270

Interest on bank overdraft 68 41

Audit fees 54 45

Item	2020 (N’000)	2019 (N’000)
Depreciation	1,620	1,620
Interest on loan note	360	270
Interest on bank overdraft	68	41
Audit fees	54	45

The latest industry average ratios are as follows:

Ratio	Industry Average
ROCE	18.50%
Net profit margin	4.73%
Gross profit margin	35.23%
Assets turnover	3.91 times
Current ratio	1.90:1
Quick ratio	1.27:1
Trade receivables period	52 days
Trade payables period	49 days
Inventory turnover	18.30 times
Gearing ratio	32.71%

Answer

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Tags: Current Ratio, Financial Ratios, Net Profit Margin, Performance Analysis, ROCE
Level: Level 2

Topic: Presentation of Financial Statements (IAS 1)
Series: NOV 2021

CR – May 2020 – Q5 – Financial Performance and Position of Bossman Ltd

This question involves analyzing the financial performance and position of Bossman Ltd over three years using ratio analysis.

Question

Answer

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Tags: Financial Analysis, Liquidity, Performance Analysis, Profitability, Solvency
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: MAY 2020

FR – Dec 2022 – L2 – Q4 – Financial Analysis & Ratios

Analyze and compare Madina Ltd.’s performance using key financial ratios for the years 2020 and 2021, including comparisons with industry standards.

Question

Madina Ltd is engaged in the processing of palm fruits to produce palm oil and palm kernel oil. The financial statements of the company for the years ended 31st December 2020 and 2021 are as follows:

Statement of Profit or Loss for the year ended

Description	2021 (GH¢’000)	2020 (GH¢’000)
Revenue	123,817	95,620
Cost of sales	(84,940)	(76,240)
Net gains from changes in fair value of biological assets	84	754
Gross profit	38,961	20,134
Administrative expenses	(11,727)	(8,494)
Other income	1,267	927
Operating profit	28,501	12,567
Finance income	888	508
Profit before income tax	29,389	13,075
Income tax expense	(4,692)	(3,422)
Profit for the year	24,697	9,653

Statement of Financial Position as at:

Description	2021 (GH¢’000)	2020 (GH¢’000)
Non-current assets
Property, Plant & Equipment	57,909	49,471
Financial assets	5,221	5,137
Current assets
Inventories	8,490	9,370
Trade Receivables	24,663	18,304
Cash and cash equivalents	22,832	10,618
Total Assets	119,115	92,900

The following ratios have been gathered from the food and processing industry for the year ended 31 December 2021:

Return on Equity (%) 23.52
Gross Profit Margin (%) 29.57
Net Profit Margin (%) 22.16
Current Ratio (times) 2.5
Acid Test Ratio (times) 1.8
Inventory Turnover (days) 20
Trade Receivables Collection (days) 68
Trade Payables Settlement (days) 32

Required:
Write a report to the Board of Directors of Madina Ltd, assessing the company’s performance for the year ended 31 December 2021 in relation to the industry and the comparative year.

Answer

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Tags: Financial Ratios, Liquidity, Performance Analysis, Profitability
Level: Level 2

Topic: Financial Statement Analysis
Series: DEC 2022

FR – MAY 2021 – L2 – Q4a – Performance Analysis

Analyze Zeus Ltd's performance and position from 2018 to 2020, including calculations.

Question

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)

Answer

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Tags: Liquidity, Operating Efficiency, Performance Analysis, Profitability, Solvency
Level: Level 2

Topic: Financial Statement Analysis
Series: MAY 2021

FR – MAY 2021 – L2 – Q4b – Areas Requiring Further Investigation

Identify five areas needing further investigation regarding Zeus Ltd's performance.

Question

Summarising FIVE (5) areas that require further investigation, including reference to other pieces of information which would complement your analysis of the performance of Zeus Ltd.

Answer

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Tags: Accounting Policies, Corporate Governance, Financial Reporting, Investigation, Performance Analysis
Level: Level 2

Topic: Financial Statement Analysis
Series: MAY 2021

FR – July 2023 – L2 – Q4 – Performance Analysis

Assess the financial performance of Besease Ltd using financial ratios and prepare a report for the board of directors.

Question

Below are the financial statements for the year ended 31 December 2021:

Statement of comprehensive income for the year ended 31 December

	2021 (GH¢)	2020 (GH¢)
Revenue	7,315,927	6,184,754
Cost of sales	(4,322,986)	(3,441,339)
Gross profit	2,992,941	2,743,415
Other income	330,812	280,832
Administrative expenses	(2,511,179)	(2,648,987)
Operating profit	812,574	375,260
Finance cost	(496,913)	(174,872)
Profit before tax	315,661	200,388
Taxation	(188,621)	(30,700)
Profit for the year	127,040	169,688

Statement of financial position as at 31 December

	2021 (GH¢)	2020 (GH¢)
Non-current assets
Property, Plant & Equipment	9,224,988	5,102,799
Intangible assets	35,824	33,350
Investments	36,629	36,629
Total non-current assets	9,297,441	5,172,778
Current assets
Inventories	2,878,337	1,329,279
Trade receivables	1,875,594	2,246,747
Cash and bank balances	527,412	372,081
Total current assets	5,281,343	3,948,107
Total assets	14,578,784	9,120,885
Equity & Liabilities
Equity
Share capital	217,467	217,467
Retained earnings	1,289,140	1,162,100
Credit reserve	826,528	1,102,037
Total equity	2,333,135	2,481,604
Non-current liabilities
Interest-bearing loans	6,708,598	2,800,223
Deferred taxation	187,624	186,304
Total non-current liabilities	6,896,222	2,986,527
Current liabilities
Trade payables	1,257,693	1,550,466
Taxation	118,337	101,391
Other payables	2,993,667	1,021,167
Accrued expenses	979,730	979,730
Total current liabilities	5,349,427	3,652,754
Total equity & liabilities	14,578,784	9,120,885

Required:
Write a report to the Board of Directors assessing the comparative performance of Besease Ltd for the year ended 31 December 2021 using the given ratios.

Answer

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Tags: Efficiency, Financial Ratios, Gearing, Liquidity, Performance Analysis, Profitability
Level: Level 2

Topic: Performance analysis
Series: JULY 2023

FR – Nov 2021 – L2 – Q4 -Financial Statement Analysis

Analysis of financial ratios and performance of Bebebe Ltd for 2019 and 2020.

Question

The following are the accounts of Bebebe Ltd (Bebebe), a company that manufactures playground equipment for the year ended 30 November 2020.

Statement of Comprehensive Income for the year ended 30 November:

Required:

a) Calculate, for both years, the return on equity and the return on capital employed. (4 marks)

b) Calculate, for both years, TWO (2) investment ratios to a potential investor. (4 marks)

c) Calculate, for both years, TWO (2) ratios of interest to a potential long-term lender. (4 marks)

d) Comment on the performance of Bebebe to a potential shareholder and lender using the ratios calculated above. (5 marks)

e) Explain THREE (3) weaknesses in these ratios.

(3 marks)

Answer

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Tags: Financial Ratios, Investment Ratios, Lender Ratios, Performance Analysis, Return on Capital Employed, Return on Equity
Level: Level 2

Topic: Financial Statement Analysis
Series: NOV 2021

CR – Aug 2022 – L3 – Q5 – Analysis and interpretation of financial statements

This question requires writing a report that assesses the comparative performance of a company using various financial ratios (profitability, liquidity, efficiency, and gearing).

Question

Statement of Comprehensive Income for the year 31 December

Additional Information:

i) Finance income relates to interest earned on the company’s investment in Government of Ghana loan notes.

ii) Dividend payable represents the dividend declared or approved by shareholders at the last Annual General Meeting.

Required:

Answer

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Tags: Efficiency, Financial Ratios, Gearing, Liquidity, Performance Analysis, Profitability
Level: Level 3

Topic: Analysis and Interpretation of Financial Statements
Series: AUG 2022

Question Tag: Performance Analysis

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Calculate and analyze financial ratios for Onye Nigeria Plc for the years 2019 and 2020.

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Analyze and compare Madina Ltd.’s performance using key financial ratios for the years 2020 and 2021, including comparisons with industry standards.

Statement of Profit or Loss for the year ended

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Analyze Zeus Ltd's performance and position from 2018 to 2020, including calculations.

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FR – MAY 2021 – L2 – Q4b – Areas Requiring Further Investigation

Identify five areas needing further investigation regarding Zeus Ltd's performance.

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FR – July 2023 – L2 – Q4 – Performance Analysis

Assess the financial performance of Besease Ltd using financial ratios and prepare a report for the board of directors.

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FR – Nov 2021 – L2 – Q4 -Financial Statement Analysis

Analysis of financial ratios and performance of Bebebe Ltd for 2019 and 2020.

Required:

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This question requires writing a report that assesses the comparative performance of a company using various financial ratios (profitability, liquidity, efficiency, and gearing).

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Perform a vertical analysis of segment contributions to the group's financial performance.

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Calculation of financial ratios and analysis of Lamido Ltd’s financial performance and position for the year ended December 31, 2022.

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Calculate and analyze financial ratios for Onye Nigeria Plc for the years 2019 and 2020.

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CR – May 2020 – Q5 – Financial Performance and Position of Bossman Ltd

This question involves analyzing the financial performance and position of Bossman Ltd over three years using ratio analysis.

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Analyze and compare Madina Ltd.’s performance using key financial ratios for the years 2020 and 2021, including comparisons with industry standards.

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Analyze Zeus Ltd's performance and position from 2018 to 2020, including calculations.

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FR – MAY 2021 – L2 – Q4b – Areas Requiring Further Investigation

Identify five areas needing further investigation regarding Zeus Ltd's performance.

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FR – July 2023 – L2 – Q4 – Performance Analysis

Assess the financial performance of Besease Ltd using financial ratios and prepare a report for the board of directors.

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FR – Nov 2021 – L2 – Q4 -Financial Statement Analysis

Analysis of financial ratios and performance of Bebebe Ltd for 2019 and 2020.

Required:

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CR – Aug 2022 – L3 – Q5 – Analysis and interpretation of financial statements

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