Please complete all questions and show all workings. Thank you,Regards. Marque

Solution 1.1:
Data file:
2011 2010
Revenue 2065 1788.7
Cost of sales 1478.6 1304
Gross profit 586.4 484.7
Current Assets 572.3 532.2
Inventory 119 109
Receivables 400.9 347.4
Trade receivables 329.8 285.4
Other receivables 71.1 62
Cash at bank and in hand 52.4 66.8
Creditors falling due within one year 501 420.3
Bank overdraft 49.1 35.3
Taxes 62 46.7
Payables 389.9 338.3
Trade payables 236.2 210.8
Net current assets 71.3 102.9
Liquidity ratio is the ratio which helps in analyzing the firm’s ability to meet short term
obligations. For analyzing the liquidity ratios, two major ratios are used i.e. current ratio and
quick ratio.
Calculating the liquidity ratios:
Current ratio:




Current Liabilities = Creditors falling due within one year + Bank overdraft + Payables
Currents Assets (as given)
2011 2010
Current Assets 572.3 532.2
Current Liabilities 940.0 793.90
( )



( )



Quick ratio:




( )



( )


Working capital :
Solution 1.2:
Additional fund = 126000
Current market price = 1.80
Ordinary shares = 200000
Par value = 1
Calculating number of shares
Right price Number of new shares (126000 / right price)
1.6 126000/1.6 = 78750
1.5 126000/1.5 = 84000
1.4 126000/1.4 = 90000
1.2 126000/1.2 = 105000
Earnings before the rights issue are £300,000 x 20% = £60,000
This gives an earnings per share of £60,000/200,000 shares = 30p
The earnings after the rights issue will be (£300,000 + £126,000) x 20% = £85,200
Right price No. of shares Total shares EPS Dilution
(126000/right
price)
(New+200000) (85200/Total
number of
shares)
Vs 30p
1.6 78750 278750 30.6 0.6
1.5...