Assignment 2 - Financials of Boru Vaahana (Pvt) Ltd.

Boru Vaahana (Pvt) Ltd.

Statement of Profit or Loss and Other Comprehensive Income
st
for the year ended 31 March 2020
Turnover 7,000,000
Cost of Sales (2,850,000)
Gross Profit 4,150,000
Selling & distribution expenses (700,000)
Administration expenses (400,000)
Operating Profit 3,050,000
Interest expenses (200,000)
Profit before tax 2,850,000
Corporation tax (200,000)
Profit after tax 2,650,000

Boru Vaahana (Pvt) Ltd.

Statement of Financial Position
as at 31st March 2020
Non-current Assets 4,000,000

Current Assets

Inventory 450,000
Trade Debtors 725,000
Other Debtors 150,000
Prepayments & advances 125,000
Short term Investments 50,000
Cash at Bank 175,000
Cash in Hand 1,750,000
75,000
Current Liabilities

Trade Creditors 350,000

Bank Overdraft 250,000
Accrued expenses 75,000
Dividends payable 50,000
Corporation tax payable 25,000 750,000

Working Capital 1,000,000

 5,000,000
Shareholders’ Equity
Stated capital 2,000,000
Reserves 2,000,000
4,000,000
Non-current Liabilities
Bank Loan 750,000
Debentures 250,000 1,000,000
5,000,000

Additional Information

1. A detailed analysis of the cost of sales revealed the following:

 All sales and purchases have been made purely on credit
 The Cost of sales figure was made up as follows:

Opening inventory 800,000

Purchases 2,500,000
Closing inventory (450,000)
Cost of Sales 2,850,000

2. The ordinary share capital consists of 200,000 ordinary shares with a nominal value of Rs. 10 each. The
latest available market price of this share is Rs. 50.00 st
3. The trade debtors and trade creditors balances as at 31 March 2019 had been Rs. 600,000 and Rs.
400,000 respectively

Required

Calculate each of the following financial ratios and comment on what each of those ratios generally
communicate about Boru Vaahana (Pvt) Ltd.’s financial performance and financial position:

i. Net Profit Margin

ii. Return on Capital Employed
iii. Current Ratio
iv. Inventory Residence Period (Inventory Turnover Days)
v. Debtors turnover (Average Collection Period)
vi. Creditors Turnover (Average Payment Period)
vii. Debt to Total Assets (Gearing) ratio