User Account

All Pages

How the companys overall performance compares

Assignment Help Accounting Basics
Reference no: EM13343035

Peter Harris has been told that Tech Logistics plc is a fast growing company and he seeks your advice on whether or not to buy shares in the company. He has provided you with the following summarised information taken from the recent annual accounts of Tech Logistics plc:

 

 

2011 (£'000)

2010 (£'000)

Income statement for the period:

 

 

Revenue*

27,400

25,000

Gross profit

9,300

7,300

Net profit (after interest and taxation)

890

810

Dividend

500

500

Balance sheet:

 

 

Non-current assets

11,340

10,860

Inventories

1,380

1,300

Trade receivables

980

810

Cash at bank

320

400

Current Liabilities/Trade payables

3,140

2,900

Non-current liabilities

1,620

1,700

Share capital (£1 shares fully paid)

8,000

8,000

Retained earnings

1,340

860

* Assume all sales and purchases are made on credit rather than cash payment.

The share price of Tech Logistics plc is currently 130 pence per share (110 pence in 2010) and it has been around this level for the past few months. The trade association to which Tech Logistics plc belongs compiles ratios taken from the annual accounts of its members, and from other sources, and you have obtained the following recent industry averages for some key ratios:

     Gross profit margin - 50%

     Current ratio - 2.50 times (or 2.50:1)

     Acid test ratio - 1.90 times (or 1.90:1)

     Average settlement period for trade receivables - 25 days

     Average inventories turnover period - 30 days

     Gearing ratio - 60%

     Price/earnings ratio - 10 times

Question 1

Calculate the above ratios (a)-(g) for Tech Logistics plc for the 2010 and 2011 periods. Show how you have arrived at your answers, so your tutor can provide specific feedback if errors have been made.

Question 2

Comment on how the company's overall performance compares to the average for its industry, pointing out any significant features, assumptions and limitations of the information used to analyse the company's performance.

Question 3

On the basis of the data available, what advice would you give to Peter Harris? Consider the return that Peter could expect from owning the shares compared with leaving the money on deposit with the bank. What further information would you advise him to seek before deciding whether or not to buy shares in Tech Logistics Plc.?

Reference no: EM13343035

Questions Cloud

Entertainment,and formulating values : Describe how you've used media over the last few days in these areas: cognition, diversion, social utility, and withdrawal. Now describe how the media has helped you during this same period in terms fo surveillance, interpretation, linkage, en..
Define a certain substance has a heat of vaporization : A certain substance has a heat of vaporization of 52.17 kJ/mol. At what Kelvin temperature will the vapor pressure be 4.00 times higher than it was at 291 K
Find difference between your angular and your friend speed : You and your friend are standing on a horizontal platform that is rotating about its center. What is the difference between your angular speed (in rad/s) and your friend's speed
Major theoretical frameworks or perspectives : Social life can be interpreted from one of the three major theoretical frameworks or perspectives. Describe the major points of each framework/perspective and discuss which perspective you think provides a more accurate or complete view of the soc..
How the companys overall performance compares : Calculate the above ratios (a)-(g) for Tech Logistics plc for the 2010 and 2011 periods. Show how you have arrived at your answers, so your tutor can provide specific feedback if errors have been made.
Find the moment of inertia of the disk : A solid disk is rotating clockwise with an angular velocity of ? = 3 rad/s. Find the moment of inertia of the disk
Review of gender roles from a global perspective : Based on a review of gender roles from a global perspective, explain why the UN Conference in Beijing was a watershed for women.
Study and critique an enterprise website : Create a website to present your results. You must critique a website that is different from the rest of the class
What will be the rotational frequency of the wheel : What is the angular acceleration of the wheel? If the wheel was initially at rest and the torque is applied for 15 s, what will be the rotational frequency of the wheel

Reviews

Write a Review

Accounting Basics Questions & Answers

  Compute the amount of gain or loss to elton

Elton, Inc., which owes Boston Co. $900,000 in notes payable, is in financial difficulty. To eliminate the debt, Boston agrees to accept from Elton land having a fair market value of $680,000 and a recorded cost of $510,000.

  Commitments and unrecorded liabilities to vendors

How might a purchasing manager use his/her position to defraud the company? What can be done to prevent it? Where could an auditor look to find evidence of losses on purchase commitments and unrecorded liabilities to vendors?

  Establish pricing structure for radiology on a per procedure

Establish a pricing structure for radiology on a per-procedure basis. Present budgetary data is presented below:

  What are the best and worst case npvs

What are the best and worst case NPVs with these projections? (Do not round intermediate calculations. A negative amount should be indicated by a minus sign. Round your answers to 2 decimal places

  Depreciation for the first year of the trucks useful life

Finx, Inc., purchased a truck for $35,000. The truck is expected to be driven 15,000 miles per year over a five-year period and then sold for approximately $5,000. Determine depreciation for the first year of the truck's useful life by the straigh..

  Categories of adjusting entries

Distinguish between the two categories of adjusting entries, and identify the types of adjustments applicable to each category.

  Amounts applicable to future services

Orange Cable TV Company, an accrual basis taxpayer, allows its customers to pay by the year in advance ($350 per year), or two years in advance ($680). In September 2009, the company collected the following amounts applicable to future services:

  What are rhonda penalties for failure to file and to pay

Rhonda, a calendar year taxpayer, filed her 2010 return on November 4, 2012. She did not obtain an extension for filing her return, and the return reflects additional income tax due of $25,000.

  Securities markets-economy

After the events of September 11, we were without our securities markets for few days. Though, it was a difficult condition, the markets opened in a few days and we managed.

  Discussing finance details of foreign project

A foreign project that is profitable when valued on its own will always be profitable from the parent firm's standpoint. True or false? Explain.

  Delaney income tax payable

In 2007, Delaney Company had revenues of $180,000 for book purposes and $150,000 for tax purposes. Delaney also had expenses of $100,000 for both book and tax purposes. If Delaney has a 35% tax rate, what is Delaney's income tax payable for 2007?

  What is the cost of the second passenger

if you are driving in your own car to another city, how much will it really cost you to make that drive? Should you include the cost of the car, part of the cost of the car, none of it? What if a friend asked if he could ride with you? What is the..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd