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Assignments must be typed and the cover page on blackboard must be used
giving the students’ names, ID numbers, degree course (e.g. BComm), name of
lecturer and class group (i.e. either A or B). The assignment is worth 10% of the
total marks for the year. Assignment should be stapled once in the top left hand
corner and should NOT be placed in a plastic cover.
NOTE
Unless specifically directed otherwise, all questions relate to ‘Group’ activity and
not ‘Company’ activity (you will note that there are financial statements included
for the ‘Group’ (the Company and all of the subsidiary companies it owns) as a
whole and for the ‘Company’ on its own. For the purpose of this assignment use
the Group Income Statement (pg 36) and ignore the Group Statement of
Comprehensive Income (pg 39) as it only contains other comprehensive income.
4. What has the group spent on additional Property Plant & Equipment assets
during 2009? Excluding exchange adjustments, what is the net book value
of assets disposed of during 2009?
5. What did the group spend on additional Property Plant & Equipment assets
during 2008? What could explain the increase/decrease in expenditure on
Property Plant and Equipment assets?
7. Are most of the inventories (a) goods purchased for resale or (b) finished
and partly finished goods that have been manufactured and the raw
materials purchased in advance of manufacture?
9. Why do you think there is a rather formal Report of the Directors as well as
the more informal Chairman’s Statement?
11. In your opinion, what purpose might the Auditors’ Report on page 34
serve?
14. Identify three efforts made by the Group to cope with the economic
downturn.
15. The Group established a procurement warehouse in Shanghai in 2008.
According to the Chairman’s Statement, how have the Grafton Group
benefited from this warehouse?
16. In relation to the categories of assets set out below: (a) What method of
depreciation does the group employ? (b) If the depreciation policy was
expressed in terms of a % rate, what range of rates would apply?
Freehold Buildings
Plant and machinery
Motor vehicles
17. What happens if the resale value of stock/inventory drops below its original
cost?
18. Is the amount of value added tax charged to customers and subsequently
paid over to the government, included in turnover?
19. Why are there always likely to be Taxation Due figures (paye, social welfare
and corporation tax) in the current liabilities in the balance sheet?
20. What is the average (group) revenue generated per employee? What is the
average remuneration of each employee in the group?
21. Explain the item in the group balance sheet ‘Revaluation Reserve’.
22. Explain how the Basic Earnings per Share figure in the Group Income
Statement has been calculated.
23. Calculate the following ratios for the group for 2008 and 2009 and explain
their significance (your explanation should be informed by information
gleaned from your review of the Chairman’s Statement, Director’s Report
and the Financial Statements and relevant notes):
24. Identify two ratios that a potential lender to the Grafton group would be
interested in.
25. Apart from comparing trends year on year for the same company using
ratios, what other comparison could be made using ratios to provide
useful information?
26. Give a short commentary (half page typed) on the group liquidity and
solvency position.
[END OF QUESTIONS]