Financial Reporting for BusinessesFinancial analysis of UNITE 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, efficiency and gearing for the years 2018 and 2017ProfitabilityReturn on equity:Profit before interest 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 before interestEquity245.8 × 100--------- = 11.7%2098.8 223.8 × 100------------- = 12.76%1754.2 12.76 – 11.7 × 100------------- = 8.3% 12.76Gross Profit margin:Gross ProfitSalesYear 2018Year 2017Change88.1 × 100------- = 68.67 %128.3 78.2 × 100------- = 65.55 %119.3 65.55 – 68.67 ×100---------------=4.76%65.55Operating Profit margin:Operating ProfitSalesYear 2018Year 2017Change64.5 ×100------ = 50%128.3 51.3 ×100------ = 43%119.343 – 50 ×100--------- = 5%432