QUESTION 2: ANALYSIS AND INTERPRETATION OF FINANCIAL INFORMATION
(32 marks: 29 minutes)
2.1
PHATUDI LTD
The given information relates to Phatudi Ltd, their financial year ended on
29 February 2024.
2.1.1 Profitability:
Quote and explain TWO financial indicators to indicate that expenses of a company
are managed efficiently.
2.1.2 Liquidity:
The current ratio and the acid-test ratio figures for 2023 and 2024 indicate that a
company has a problem with short term debts.
(4)
Identify TWO other liquidity indicators which indicate that a company is likely to
have serious liquidity problems in future. Provide ONE point in EACH case and
use figures to explain.
(6)
2.1.3 Risk and Gearing:
The financial director decided to increase the loan. Provide TWO reasons to support
this decision. Quote relevant financial indicators and figures for EACH reason
provided.
(6)
2.1.4 Dividends, earnings and returns:
Comment on the % return on shareholders' equity of the company.
(4)
The dividend policy changed in 2024. Explain the policy used in EACH year. Provide
figures to support your explanation in EACH case.
(4)
ide.
ment
ce
БА
Explain TWO ways in which the shareholders have benefitted from the repurchase (4)
of shares.
2.1.5 Explain why directors were of the opinion that 540 cents offered on the shares
repurchased was a fair price. Quote TWO financial indicators with figures.
(4)
as
(32 marks: 29 minutes)
2.1
PHATUDI LTD
The given information relates to Phatudi Ltd, their financial year ended on
29 February 2024.
2.1.1 Profitability:
Quote and explain TWO financial indicators to indicate that expenses of a company
are managed efficiently.
2.1.2 Liquidity:
The current ratio and the acid-test ratio figures for 2023 and 2024 indicate that a
company has a problem with short term debts.
(4)
Identify TWO other liquidity indicators which indicate that a company is likely to
have serious liquidity problems in future. Provide ONE point in EACH case and
use figures to explain.
(6)
2.1.3 Risk and Gearing:
The financial director decided to increase the loan. Provide TWO reasons to support
this decision. Quote relevant financial indicators and figures for EACH reason
provided.
(6)
2.1.4 Dividends, earnings and returns:
Comment on the % return on shareholders' equity of the company.
(4)
The dividend policy changed in 2024. Explain the policy used in EACH year. Provide
figures to support your explanation in EACH case.
(4)
ide.
ment
ce
БА
Explain TWO ways in which the shareholders have benefitted from the repurchase (4)
of shares.
2.1.5 Explain why directors were of the opinion that 540 cents offered on the shares
repurchased was a fair price. Quote TWO financial indicators with figures.
(4)
as
