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Financial Analysis and Investment Appraisal of RP Plc

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Added on  2023-06-07

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This article provides a comprehensive financial analysis and investment appraisal of RP Plc, including its profitability, liquidity, and efficiency ratios. It also includes a detailed calculation of ARR, NPV, and payback period, along with the advantages of IRR. The article also suggests five other factors that need to be considered before making an investment decision.

Financial Analysis and Investment Appraisal of RP Plc

   Added on 2023-06-07

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ONLINE EXAM
Financial Analysis and Investment Appraisal of RP Plc_1
SECTION A
ANSWERS FOR Q1(a) & (b)
1 (a)
RP plc
Income Statement for the year ended 31/12/2021 [in £000s]
Particulars
Sales 1100
Cost of sales
Opening inventory 100
Purchases 650
Closing inventory [90] [660]
GP 440
Expenses
Rent, rates & insurance [40 – 5 + 1] 36
Selling & distribution expenses [50 – 4] 46
Advertising 20
Gas & electricity [25 + 2] 27
Audit fee [10 + 1] 11
Depreciation of Equipment [130 – 30] x 0.2 20
Depreciation of furniture & fittings [100 x 0.2] 20
Staff Salaries 100
Directors’ remuneration 34
Bad debt 4
Financial Analysis and Investment Appraisal of RP Plc_2
Interest on bank loan 7
Debenture interest [10 + 1] 11 [336]
PBT 104
Provision for taxation [25]
PAT 79
Dividends – interim
-- final [350 x £0.08]
20
28 [48]
Retained profit for the year 31
Retained profit b/f 70
Retained profit c/f 101
1 (b)
RP plc
Statement Of Financial Position as at 31/12/2021 [in £000s]
Non-current assets Cost Accumulated
Depreciation
NBV
Premises 600 --- 600
Equipment 130 30 + 20 = 50 80
Furnitures & fittings 100 60 + 20 = 80 20
830 130 700
Current assets
Inventory 90
Receivables 87
Prepayments [5 + 4] 9
Bank 9
Cash 4 199
Total assets 899
Share capital
£1 Ordinary shares 350
Reserves
Share premium 120
Retained profits 101
Shareholders’ funds 571
Non-current liabilities
7% Long term bank loan 100
11% Debentures 100 200
Current liabilities
Financial Analysis and Investment Appraisal of RP Plc_3

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