Brad's Engineering Pty Ltd NET ASSETS (Assets - Lizbilities) $\quad$ $\quad$

question 55

Essay

Brad's Engineering Pty Ltd
$\begin{array}{lll}&2018&2017\\\text { Statement of financial positions as at 30 June } & \$ & \$ \\\text { Total Current Assets } & 11080 & 10280 \\\text { Total Fixed Assets } & 75000 & 42000\\\text { TOTAL ASSETS } & \$ 86,080 &\$ 52,280 \\\text { Total Current Liabilities } & 3400 & 1960 \\\text { Long-term Liabilities } & 20000 & 8500\\\text { TOTAL LIABILITIES }&\$23,400&\$10,460\end{array}$ NET ASSETS (Assets - Lizbilities) $\quad$$\quad$ $62,680 $\quad$ $41,820 SHAREHOLDERS' EQUITY
$\begin{array}{ll}\text { Share capital }&40,000 & 30,000 \\\text { Reserves and retained profits }&22,680 & 11,820 \\&\$62,680&\$41,820\end{array}$ Additional Information:
$\begin{array}{lll}&2018&2017\\\text { Net profit after interest \& tax } & \$ 10,860 & \$ 6,000 \\\text { Interest expense } & 2000 & 900 \\\text { Taxation expense } & 3000 & 1500\end{array}$ REQUIRED:
a)From the information provided above, calculate each of the following ratios for each of the years ending 30 June 2017 and 2018.
Gearing ratio. Use formula $\quad$$\quad$$\frac{\text {Long - term liabilities }}{\text {Share cropital and reserves + long - term lizbilities }}$ Interest cover ratio. Use formula $\quad$$\quad$$\frac{\text {Profit before interest and tax }}{\text {Interest }}$ b)Comment on the movements in the ratios over the two years and the adequacy of the level of gearing and interest cover.
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Definitions:

Mean

The arithmetic average of a distribution, obtained by adding the scores and then dividing by the number of scores.

Central Tendency

A statistical measure that identifies a single value as representative of an entire distribution. It aims to provide an accurate description of the entire data set.

Extremely Low Scores

Results that are significantly below the average range in assessments or evaluations.

Bar Graph

A graphical representation of data using bars of different lengths or heights to compare values across categories.