2. Hamilton plc provides you with the following information taken from the Profit
and Loss Accounts and Balance Sheets for the years ended 31 December Year 2
and Year 3.
Year 2 Year 3
Turnover 900 1,575
Gross Profit 450 690
Operating Profit 180 380
Net Profit before Tax 120 366
Net Profit after Tax 95 261
Ordinary Share 45 68
Preference Share 36 54
Fixed Assets (Net) 850 1,735
Stocks 75 162
Debtors 99 254
Creditors 60 60
Corporation Tax 45 105
Bank Overpublish 15
10% Debentures (Year 3–6) 300
£1 Ordinary Shares 400 1,050
£1 Preference Shares 375 528
Retained Profit 129 153
In addition you are provided with the following information.
The figures taken from the balance sheets for stocks, debtors and creditors are
typical of the balances held throughout each year. All purchases and sales are on
Accountants use ratios to analyse the performance, efficiency and liquidity of a
(a) Using the above information calculate appropriate ratios and comment on
whether these indicate an improvement or deterioration, suggesting possible
reasons for any changes.
NB Ratios should be calculated to 2 decimal places.
The Dividend Yield for Year 3 has been calculated as 7·5%.
(b) For year 3 calculate:
(i) Market Price per Share (nearest 1p);
(ii) Earnings per Share;
(iii) Price Earnings Ratio;.
(iv) Dividend Cover.
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