The following financial statements relate to ZB Plc. ZB PLC Statement of comprehensive Income for the year ended 31st December: 2021 2020 K'000 K'000 Revenue 3,068,959 2,305,425 Cost of sales -2,024,857 -1,346,701 Gross profit 1,044,102 958,724 Other expenses -244,307 -458,473 Net impairment credit on financial assets 12,291 3,002 Distribution costs -208,749 -178,028 Administrative expenses -413,157 -302,323 Operating profit 190,180 22,902 Finance Income 2,978 1,557 Interest Expense -86,936 -15,974 Profit before income tax 106,222 8,485 Income tax credit (expense) 41,730 -2,546 Profit for the year 147,952 5,939 Other comprehensive income Total comprehensive income for the year 147,952 5,939 ZB PLC Statement of Financial Position as at 31st December: 2021 2020 K'000 K'000 Assets Non-current assets Property, plant and equipment 2,488,670 2,149,855 Intangible asset 22,661 22,816 Loan receivable 2,095 2,511,331 2,174,766 Current assets Inventories 609,424 426,640 Trade and other receivables 238,316 150,474 Current income tax asset 89533 79152 Cash and bank balances 129,429 401,007 Total current assets 1,066,702 1,057,273 Total assets 3,578,033 3,232,039 Equity and liabilities Capital and reserves Share capital 5,460 5,460 Share premium 450,207 450,207 Retained earnings 683,337 535,385 Total equity 1,139,004 991,052 Non-current liabilities Deferred tax liabilities 523,375 610,979 Total non-current liabilities 523,375 610,979 Current liabilities Borrowings 697,110 35,000 Trade and other payables 1,216,544 1,595,008 Total current liabilities 1,913,654 1,630,008 Total liabilities 2,437,029 2,240,987 Total equity and liabilities 3,576,033 3,232,039 (Source: ZB PLc) Required: Calculate the following ratios for 2021 and 2020 for ZB Plc: Gross profit % Net profit % Trade debtor days

The following financial statements relate to ZB Plc. ZB PLC Statement of comprehensive Income for the year ended 31st December: 2021 2020 K'000 K'000 Revenue 3,068,959 2,305,425 Cost of sales -2,024,857 -1,346,701 Gross profit 1,044,102 958,724 Other expenses -244,307 -458,473 Net impairment credit on financial assets 12,291 3,002 Distribution costs -208,749 -178,028 Administrative expenses -413,157 -302,323 Operating profit 190,180 22,902 Finance Income 2,978 1,557 Interest Expense -86,936 -15,974 Profit before income tax 106,222 8,485 Income tax credit (expense) 41,730 -2,546 Profit for the year 147,952 5,939 Other comprehensive income Total comprehensive income for the year 147,952 5,939 ZB PLC Statement of Financial Position as at 31st December: 2021 2020 K'000 K'000 Assets Non-current assets Property, plant and equipment 2,488,670 2,149,855 Intangible asset 22,661 22,816 Loan receivable 2,095 2,511,331 2,174,766 Current assets Inventories 609,424 426,640 Trade and other receivables 238,316 150,474 Current income tax asset 89533 79152 Cash and bank balances 129,429 401,007 Total current assets 1,066,702 1,057,273 Total assets 3,578,033 3,232,039 Equity and liabilities Capital and reserves Share capital 5,460 5,460 Share premium 450,207 450,207 Retained earnings 683,337 535,385 Total equity 1,139,004 991,052 Non-current liabilities Deferred tax liabilities 523,375 610,979 Total non-current liabilities 523,375 610,979 Current liabilities Borrowings 697,110 35,000 Trade and other payables 1,216,544 1,595,008 Total current liabilities 1,913,654 1,630,008 Total liabilities 2,437,029 2,240,987 Total equity and liabilities 3,576,033 3,232,039 (Source: ZB PLc) Required: Calculate the following ratios for 2021 and 2020 for ZB Plc: Gross profit % Net profit % Trade debtor days

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ISBN:9781285743615

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter17: Financial Statement Analysis

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QUESTION SIX

The following financial statements relate to ZB Plc.

ZB PLC
Statement of comprehensive Income for the year ended 31st December:
	2021	2020
	K'000	K'000
Revenue	3,068,959	2,305,425
Cost of sales	-2,024,857	-1,346,701
Gross profit	1,044,102	958,724
Other expenses	-244,307	-458,473
Net impairment credit on financial assets	12,291	3,002
Distribution costs	-208,749	-178,028
Administrative expenses	-413,157	-302,323
Operating profit	190,180	22,902
Finance Income	2,978	1,557
Interest Expense	-86,936	-15,974

Profit before income tax	106,222	8,485
Income tax credit (expense)	41,730	-2,546
Profit for the year	147,952	5,939
Other comprehensive income
Total comprehensive income for the year	147,952	5,939

ZB PLC
Statement of Financial Position as at 31st December:
	2021	2020
	K'000	K'000
Assets
*Non-current assets*
Property, plant and equipment	2,488,670	2,149,855
Intangible asset	22,661	22,816
Loan receivable		2,095
	2,511,331	2,174,766
*Current assets*
Inventories	609,424	426,640
Trade and other receivables	238,316	150,474
Current income tax asset	89533	79152
Cash and bank balances	129,429	401,007
*Total current assets*	1,066,702	1,057,273
Total assets	3,578,033	3,232,039
Equity and liabilities
*Capital and reserves*
Share capital	5,460	5,460
Share premium	450,207	450,207
Retained earnings	683,337	535,385
Total equity	1,139,004	991,052
*Non-current liabilities*
Deferred tax liabilities	523,375	610,979
Total non-current liabilities	523,375	610,979
*Current liabilities*
Borrowings	697,110	35,000
Trade and other payables	1,216,544	1,595,008
Total current liabilities	1,913,654	1,630,008
Total liabilities	2,437,029	2,240,987
Total equity and liabilities	3,576,033	3,232,039

(Source: ZB PLc)

Required:

Calculate the following ratios for 2021 and 2020 for ZB Plc:
1. Gross profit %
2. Net profit %
3. Trade debtor days
4. Trade creditor days
5. Current ratio
6. Acid test ratio
7. Interest cover ratio
8. Total liabilities to equity ratio
9. Return on equity
10. Return on total assets

Prepare a report commenting on the performance of the company using ratios calculated in (a) above and specifically addressing the following performance areas:
1. Profitability
2. Efficiency
3. Liquidity
4. Gearing

Investment returns

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