Financial Reporting Assignment - UNITE GROUP

Added on - Dec 2020

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Financial Reporting forBusinessesFinancial analysis ofUNITE GROUP.
ContentsProfitability............................................................................................................................................2Return on equity:...............................................................................................................................2Gross Profit margin:...........................................................................................................................2Operating Profit margin:....................................................................................................................2Asset Turnover:.................................................................................................................................3Liquidity.................................................................................................................................................3Current ratio......................................................................................................................................3Acid Test Ratio...................................................................................................................................3Efficiency...............................................................................................................................................4Inventory Days...................................................................................................................................4Debtor Days.......................................................................................................................................4Creditor Days.....................................................................................................................................4Gearing..................................................................................................................................................5Investor’s Return...................................................................................................................................5Interest cover....................................................................................................................................5Earning per share...............................................................................................................................5Profitability............................................................................................................................................6Liquidity.................................................................................................................................................6Efficiency...............................................................................................................................................7Gearing..................................................................................................................................................7Investor’s return....................................................................................................................................8Lease......................................................................................................................................................9THE BASICS OF REPORTING LEASES UNDER IAS17 ARE......................................................................9PROBLEMS WITH IAS17.....................................................................................................................9LEASES UNDER IFRS 16......................................................................................................................9EFFECTS OF IFRS 16 ON UNITE GROUP..................................................................................................9Bibliography.........................................................................................................................................111
a) Calculate ratios for profitability, liquidity, efficiencyand gearing for the years 2018 and 2017ProfitabilityReturn on equity:Profit beforeinterest and taxEquity + DebtYear 2018Year 2017Change163.50 × 100------------------ = 6%2098.8 + 603.3155 × 100---------------- =6.8%1754.2 + 519.96.8 – 6 × 100--------- = 12%6.8Profit beforeinterestEquity245.8 × 100--------- = 11.7%2098.8223.8 × 100------------- =12.76%1754.212.76 – 11.7 ×100------------- = 8.3%12.76Gross Profit margin:Gross ProfitSalesYear 2018Year 2017Change88.1 × 100------- = 68.67 %128.378.2 × 100------- = 65.55 %119.365.55 – 68.67×100---------------=4.76%65.55Operating Profit margin:Operating ProfitSalesYear 2018Year 2017Change64.5 ×100------ = 50%128.351.3 ×100------ = 43%119.343 – 50 ×100--------- = 5%432
Asset Turnover:SalesEquity + Longterm debtYear 2018Year 2017Change128.3 ×100---------- =4.77%2098.8 + 591.3119.3 ×100-------- = 5.27%1754.2 + 511.55.27 – 4.77 ×100------------ = 9.5 %5.27LiquidityCurrent ratioCurrent assets:current liabilitiesYear 2018Year 2017Change220.80:147.4=1.5:1138.6:157.5=0.88:10.88 – 1.5 ×100----------- = 70%0.88Acid Test RatioYear 2018Year 2017Change3
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