Company profit and loss and balance sheets

Assignment Help Finance Basics

Reference no: EM13826482

Problem:

A2Z Maritime is a ship-owning company that had some long term contracts that include land transport delivery, but these seem to be declining. However, there are several time charters that appear to be secure for long term. You have been asked to do some work for this company and feel that its financial position could be an issue. The outlook seems to be growth in trade and a modest increase in chartering rates. You have taken the comparative figures over the last three years of the company's profit and loss and balance sheets and penciled in some percentages (see table below).

A2z maritime summary of trading results For Year Ended 31 March
	2003		2004		2005
	$m	%	$m	%	$m	%
Total Chartering Revenue Other Revenue TOTAL REVENUE	127	91	130.1	95	141.1	97
	12	9	7	5	4.7	3
	139	100	1	100	8	100
Ship Operating Costs Shore Operating Costs TOTAL OPERATING COSTS	82.2	59	80.9	59	90.1	61
	37.8	27	38	28	39.6	27
	120	86	9	87	7	88
Gross Profit Selling &Administration Net operating Profit	19	14	18.2	13	16.1	12
	8	6	9	7	9.4	7
	11	8	2	6	7	5
Bank Loan Sundry Creditors/payables Accrued Expenses Current Liabilities	10.7	16	9.6	13	14.1	16
	14.2	22	17.7	24	22.3	25
	1.4	2	1.5	2	1.7	2
	3	40	8	39	1	43
Mortgage on Ships Five-year loan at 5% per annum Long term Liabilities	10	15	10	14	10	11
					2.5	3
	10	15	10	14	5	14
Proprietorship /Owner's Equity	29.9	45	35.2	47	37.8	43
Total Funds Employed	66.2	100	74	100	88.4	100
Sundry Debtors(net)Receivables Inventories/stock Current Assets	18.2	28	17.7	24	23.6	27
	14.6	22	15	20	17.1	19
	8	50	7	44	7	46
Office Equipment Land Transport Ships Fixed Assets	3.4	5	3	4	7.6	9
	5.5	8	11.9	16	9.9	11
	19.6	30	19.4	26	19.2	22
	5	43	8	46	7	42
Intangible Assets/Long term Contracts	4.9	7	7	10	11	12
Total Funds Employed	2	100	74	100	4	100

Calculate from above table the following ratios to the nearest per cent to illustrate trends:
Indicate the questions that you would like to ask the company>List three points that you feel it would be prudent to discuss, giving your reasons.
If you were a director on the board, what questions would you be asking the finance department and why?

Ratio of net profit to equity (Return on Owner's capital)
Working Capital Ratio (Current Ratio)
Liquidity Ratio (Acid Test)
Debt/Equity Ratio
Breakeven Point% sales
Rate of Collection of Debtors.

Summary of Problem:

This question is basically belongs to the Finance as well as it explains about computing working capital ratio, liquidity ratio and other ratios from given information.

Reference no: EM13826482

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