The information below is drawn from the statement of financial position of C Limited at 1 September 2021.
5% Debentures (2024) $60000
Equity:
Ordinary share capital ($0.50) $240000
General reserve $36000
Retained earnings $22000
In the year ended 31 August 2022:
A final dividend payment of $12000 was made for the year ended 31 August 2021.
An interim dividend payment of $0.02 per share was made for the year ended 31 August 2022.
A transfer of $11000 was made to general reserve.
At 31 August 2022 the company proposed a final dividend of $10000 for the year ended 31 August 2022.
The revenue for the year ended 31 August 2022 was $310000 and the profit (before debenture interest) was $23000.
(a)[7]
Prepare the statement of changes in equity for the year ended 31 August 2022.
(b)[4]
Calculate the return on capital employed for the year ended 31 August 2022 to two decimal places. (Use closing capital employed).
(c(i))[2]
Calculate the profit margin for the year to two decimal places.
(c(ii))[2]
Suggest two methods by which the profit margin could be improved.
(d)[5]
Assess the two options and advise the company on the choice they should make. Support your answer.
Worked solution & mark scheme
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