NAME: AKPONIMISINGHA AMIETIMI SAMUEL

REG NO: CPSA/DAFA/ACC/M.SC/FT/2021/2022/335

COURSE TITLE: CORPORATE FINANCE
COURSE: M.SC ACCOUNTING
COURSE CODE:PGC 813
COURSE LECTURER: DR. BENJAMIN UYAGU

BOLA PLC
COMPUTATION OF RELEVANT RATIOS
S/N RATIO FORMULAE YEAR 2020 YEAR 2019
GROSS GROSS PROFIT 729 655
× 100 ×100 ×100
1 PROFIT SALES 2430 1638
PERCENTAGE =30% =40%
RETURN ON PROFIT FOR THE YEAR 121 250
×100 ×100
2 CAPITAL CAPITAL EMPLOYED 1359 829
EMPLOYED =9% =30%
NET PROFIT PROFIT AFTER TAX 175 352
×100 ×100 ×100
3 (PBIT) SALES 2430 1638
= 7% = 21%
ASSET SALES 2430 1638
4 TURNOVER TOTAL CURRENT ASSETS 1359 829
= 2 TIMES = 2 TIMES
GEARING LONG TERM DEBT 340 80
×100 ×100 × 100
5 RATIO EQUITY 730 495
= 47% = 16%
DEBT TOTAL DEBT 340+289 80+254
× 100 ×100 ×100
6 EQUITY SHAREHOLDERS EQUITY 730 495
RATIO = 86% = 67%

COMMENTS
GROSS PROFIT PERCENTAGE: There is a decline or drop of 10% gross profit margin in
2020 (40%-30%) and this may be due to cheaper pricing or increase in cost in 2020, which could
not be pass on to customers.
RETURN ON CAPITAL EMPLOYED: There is a drastic fall of ROCE from 30% in 2019 to
9% in 2020, that is a decline of 21% in 2020. This may be an indication of management
inefficient policies in 2020 or management inability to maximise the firm’s resources in 2020.
NET PROFIT (PBIT): There is a fall of net profit margin from 21% in 2019 to 7% in 2020, that
is 12% fall in 2020. This may be as a result of high expenses incurred in 2020 and cheaper
pricing.
ASSET TURNOVER: There was an equivalent utilization of the assets to generate revenue in
2019 and 2020, that is 2 times each.
GEARING RATIO: The company is reasonably geared because, both years are lower than
50%. But however, 2019 is having a lower financial risk compared to 2020 with 47%.
Management should be courteous of its borrowing terms so as to avoid a high financial risk
which can lead to liquidation.
DEBT EQUITY RATIO: There is an increased debt to equity ratio of 19% in 2020. It is
having a low cover in 2020 for its external liabilities.