Financial statements of Nimbin Pty Ltd are presented below: Nimbin P/L Statement of Financial Position As at 30 June 2015 and 2016 ($000) 2016 2015 Current assets Cash and cash equivalents $1,645 $2,110 Accounts receivables (all trades) 4,100 3,675 Inventories 7,000 6,930 ______ _____ Total current assets 12,745 12,715 ______ ______ Non-current assets Property, plant and equipment 17,190 15,330 _______ ______ Total non-current assets 17,190 15,330 _______ _______ Total assets $29,935 $28,045 ======= ====== Current liabilities Payables $5,780 $5,990 _______ ______ Total current liabilities 5,780 5,990 _______ ______ Non-current liabilities Interest-bearing liabilities 9,940 9,450 _______ _____ Total non-current liabilities 9,940 9,450 _______ _______ Total liabilities $15,720 $15,440 ====== ====== Equity Share capital $7,700 $7,700 Retained earnings 6,515 4,905 _______ _______ Total equity $14,215 $12,605 ====== ====== Nimbin P/L Income Statement As at 30 June 2016 ($000) Revenues (net sales) $55,000 Less: cost of sales 35,100 _______ Gross profit 19,900 _______ Less: Expenses Selling and distribution expenses 7,100 Administrative expenses 4,970 Finance costs 1,560 ______ Total expenses 13,630 ______ Profit before income tax 6,270 Income tax expense 1,908 ______ Profit $4,362 ===== Nimbin P/L Statement of changes in Equity For the year ended 30 June 2016 ($000) Share capital Ordinary (7,200.000 shares) Balance at start of period $7,200 ______ Balance at end of period 7,200 _______ Preference (250,000 shares) Balance at start of period 500 ______ Balance at end of period 500 ______ Total share capital $7,700 ====== Retained Earnings Balance at start of period $4,905 Total income for the period 4,362 Dividends paid – ordinary (2,702) Dividends paid – preference (50) ______ Balance at end of period $6,515 ====== Additional information: Payables include $5,620 (2016) and $5,730 (2015) trade accounts payable; the remainder is accrued expenses. Market prices of issued shares at year-end (2016): Ordinary $12; Preference $6.70. Required: Calculate the following ratios for 2016. The industry average for similar businesses is shown. (6 marks) Industry average 1. Rate of return on total assets 22% 2. Rate of return on ordinary equity 20% 3. Profit margin 4% 4. Earnings per share 45c 5. Price-earnings ratio 12.0 6. Dividend yield 5% 7. Dividend payout 70% 8. Current ratio 2.5:1 9. Quick ratio (acid ratio) 1.3:1 10. Receivables turnover 13 11. Inventory turnover 6 12. Debt ratio 40% 13. Times interest earned 6 14. Assets turnover 1.8 Given the above industry averages, comment on the company’s profitability, liquidity and use of financial gearing.
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