Topic: financial statement McCrea plc UK


McCrea plc is a UK manufacturer of garden furniture. The company has provided the following financial statements:

Statement of Financial Position as at 31 December 2019:

Non-current assets 
Plant and equipment850
Current assets 
Trade receivables1,230
Current liabilities 
Trade payables850
Bank overdraft125
Interest payable30
Non-current liabilities and equity 
Long term loans700
£1 ordinary shares750

Income Statement for the year ended 31 December 2019:

Sales revenue12,100
Cost of goods sold(9,590)
Gross profit2,510
Operating expenses(1,935)
Operating profit575
Interest expense(50)
Net profit before tax525
Net profit for the year410


(a)Calculate the following ratios for McCrea plc in 2019.

  • Return on Capital Employed (ROCE)
  • Operating profit margin
  • Inventories’ turnover period
  • Settlement period for trade receivables
  • Current ratio
  • Acid test ratio
  • Gearing ratio
  • Interest cover ratio
  • Earnings Per Share (EPS)

All calculations (including the ratio formulas) must be clearly shown.

   (9 marks)

(b)The ratios set out in the table below are those calculated for McCrea plc based on its published financial statements for the previous year (2018)

Return on Capital Employed (ROCE)15.01%
Operating profit margin4.9%
Inventories turnover period19 days
Settlement period for trade receivables41 days
Current ratio1.63
Acid test ratio1.35
Gearing ratio37.44%
Interest cover ratio8.7 times
Earnings Per Share (EPS)22.8p

Using the ratios you calculated (in part a) for McCrea plc in 2019 and the above ratios for 2018, comment on the company’s performance and financial position for the two years.

(24 marks)

(Total: 33 marks)

(maximum 200 words in total.  Tables, calculations, annotations for worked answers do not count in the word limit)

Type of service-Academic paper writing
Type of assignment-Coursework
Pages / words-2 / 550
Academic level-Undergraduate
Paper format-Harvard
Line spacing-Double
Language style-UK English

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