Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 36 views

    Mock Test - 2023

    Uploaded by

    Phuoc Truong
    The document contains a mock test with three questions. Question 1 asks to evaluate the financial performance of SunCo in 2020 compared to 2019 using various ratios. Question 2 asks to discuss the possible impact of an interest rate increase on SunCo's cost of capital. Question 3 provides financial information for MoonCo and asks to prepare a monthly cash budget for July to December 2021 and discuss sources of finance for working capital.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Mock Test - 2023

    Uploaded by

    Phuoc Truong
    36 views3 pages
    The document contains a mock test with three questions. Question 1 asks to evaluate the financial performance of SunCo in 2020 compared to 2019 using various ratios. Question 2 asks to discuss the possible impact of an interest rate increase on SunCo's cost of capital. Question 3 provides financial information for MoonCo and asks to prepare a monthly cash budget for July to December 2021 and discuss sources of finance for working capital.

    Original Description:

    finance

    Original Title

    MOCK TEST_2023

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document contains a mock test with three questions. Question 1 asks to evaluate the financial performance of SunCo in 2020 compared to 2019 using various ratios. Question 2 asks to discuss the possible impact of an interest rate increase on SunCo's cost of capital. Question 3 provides financial information for MoonCo and asks to prepare a monthly cash budget for July to December 2021 and discuss sources of finance for working capital.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    36 views3 pages

    Mock Test - 2023

    Uploaded by

    Phuoc Truong
    The document contains a mock test with three questions. Question 1 asks to evaluate the financial performance of SunCo in 2020 compared to 2019 using various ratios. Question 2 asks to discuss the possible impact of an interest rate increase on SunCo's cost of capital. Question 3 provides financial information for MoonCo and asks to prepare a monthly cash budget for July to December 2021 and discuss sources of finance for working capital.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    You are on page 1of 3

    MOCK TEST

    1.5 hours 10 minutes

    Question 1 (30 marks): Key figures have been extracted from the published
    accounts of SunCo, and are summarised below.

    Income Statements for the year ending 31 December


    2020 2019
    £m £m
    Turnover 6,980 6,590
    Cost of sales 5,475 5,145
    Gross Profit 1,505 1,445
    Administration and Distribution Expenses 1,105 990
    Profit before Interest and Tax 400 455
    Interest 60 35
    Profit before tax 340 420
    Tax 68 84
    Profit after tax 272 336
    Dividends 110 134
    Retained Profit 162 202

    Statements of Financial Position as at 31 December


    2020 2019
    £m £m
    Non-current assets 3,507 3,222

    Current assets 588 542

    Inventories 338 296


    Trade receivables 161 142
    Cash and cash equivalents 89 104
    Current Liabilities 1,250 1,309

    Trade Payables 656 595


    Overdrafts@ 12% 69 199
    Other current Liabilities 525 515
    Long term Loans @ 15% 838 568

    Net assets 2,007 1,887


    Equity 2,007 1,887
    Share Capital @ £ 0.5 per share 1,000 1,000
    Reserves 1,007 887

    Share Price £ 1.7 £ 1.9

    Required:
    a) Evaluate SunCo’s financial performance in 2020 by comparing to 2019
    with the following ratios (25 marks):
    i) Profitability ratios - ROCE, Gross profit margin, Operating profit margin;
    ii) Liquidity ratios - Current ratio, Quick ratio;
    iii) Debt ratios – Gearing ratio, Interest cover;
    iv) Investment ratios - EPS, P/E ratio, DPS.
    (You are not expected to discuss working capital management as part of your
    answer here; Calculation of ratio s= 1.5 marks x 10 ratios = 1 5 marks; Analysis of
    performance = 10 marks)

    (b) On the assumption that the Central Bank makes a substantial interest rate
    increase, discuss the possible impact on cost of capital for SunCo. (5 marks)

    Question 3 (20 marks)


    MoonCo is going to start trading on 1st Jul 2021. During the first 6 months of
    trading, the monthly sales, production and overheads (including depreciation) are
    expected as follows:

    Sale Production Overheads


    (Units) (Units) (Including
    Depreciation)
    (£ )
    Jul 16,000 20,000 20,000
    Aug 18,000 20,000 20,000
    Sep 20,000 30,000 20,000
    Oct 30,000 30,000 30,000
    Nov 40,000 40,000 30,000
    Dec 45,000 40,000 30,000

    Extra information includes:


    (i) The company is expected to have £500,000 cash at bank on 1st July 2021.
    (ii)A machine was purchased for £130,000 and is to be paid in cash on 1st Jul
    2021. The machine will have a useful life of 10 years and a residual value of
    £10,000 at the end.
    (iii) The selling price of the product will be £18 per unit. The sales are expected to
    be 40% in cash and 60% in 1 -month credit. A 2% discount is given to the
    customers who paid in cash.
    (iv) Purchases of raw materials will be £ 5 per unit on 2-month credit.
    (v) The labour cost will be £4 per unit, to be paid in the month concerned.
    (vi) Overheads are planned to be paid 80% in the month of production and
    20% in the following month.
    Required:
    (a)Prepare a monthly cash budget for the period July-December 2021. (15 marks)
    (b)Discuss sources of finance for working capital. (5 marks)

    You might also like