FINANCIAL STATEMENT ANALYSIS
The Statement of Financial Position and Statement of Profit or Loss for XYZ Ltd.
are shown below.
Statement of Financial Position
as at 30 June 2021
2021 2020
Current Assets
Cash at Bank 390 300
Trade Receivables 1,460 1,290
Short Term Investments 380 440
Inventory 2,010 1,770
Prepaid Expenses 100 100
Total Current Assets 4,340 3,900
Non-Current Assets
Long Term Investments 200 500
Property, Plant and Equip. 2,100 1,800
Other 100 100
Total Non Current Assets 2,400 2,400
Total Assets 6,740 6,300
Current Liabilities
Trade Payables 910 800
Accrued Expenses 250 250
Loan Payable 600 650
Total Current Liabilities 1,760 1,600
Non Current Liabilities
Loan Payable 1,900 1,700
Total Non Current Liabilities 1,900 1,700
Total Liabilities 3,660 3,300
Net Assets 3,080 3,000
Equity
Capital 2,502 2,502
Retained Profits 578 498
Total Equity 3,080 3,000
Statement of Profit or Loss
For the year ended 30 June 2021
2021 2020
Sales 10,320 9,582
Less Cost of Sales 7,719 6,975
Gross Profit 2,601 2,607
Less Operating Expenses
Wages Expense 1,030 800
Depreciation 567 620
Interest Expense 252 230
Total Operating Expense 1,849 1,650
Operating Profit 752 957
NOTE:
1. All sales are made on credit.
2. Total assets as at 30 June 2019 were $5,900.
3. Trade Receivables as at 30 June 2019 was $1,100.
4. Inventory as at 30 June 2018 was $1,560
Ratio 2021 2020 Industry Average
Current 1.38
Net Profit 11.4%
Debt/Equity 65%
Interest Coverage 6.7
Return on Assets 21.2%
Trade Receivables 12
Inventory Turnover 6.5
Required
a) Calculate the financial ratios for 2021 and 2020.
b) Using the ratios, comment on the financial position and performance of
XYZ Ltd.
