Data Telegro Plc is a mining company that extracts and sells coal to manufacturing companies which they using for heatin

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Data Telegro Plc is a mining company that extracts and sells
coal to manufacturing companies which they using for heating. In
order to control competition and protect purchasers the mining
industry regulates and monitors performance of all companies in the
industry. The Regulatory Body set the following industry standards
for the financial year 2021/2022. These standards were required to
be met by all business operating in the mining industry. a) Expense
ratio 35% b) Gross profit margin: 40% c) Operating profit margin:
25% d) Earnings per share: P1.50 e) Return on capital employed: 15%
f) Net asset turnover: 2 times g) Return on total assets: 25% h)
Current ratio: 2 i) Quick ratio: 1 j) Inventory turnover: 25 times
k) Inventory holding period: 10 days l) Receivable collection
period: 15 days m) Payable payment period: 20 days n) Gearing: 50%
o) Interest cover: 18 times p) Working capital ratio: 40 days
Given below are financial statements of Telegro Plc for the year
ended 31 March 2022. 3 Telegro Plc Statement of comprehensive
income for the year ended 31 March 2022 P P
Revenue 1 320 000 Cost of sales (890 000) Gross profit 430 000
Distribution costs (35 000) Administration expenses (245 000)
Profit from operations 150 000 Finance costs (10 000) Profit before
taxation 140 000 Corporation tax (35 000) Profit for the year 105
000 Statement of financial position as at 31 March 2022 P P Assets
Non-current assets Property, plant and equipment 1 280 000 Current
assets Inventories 240 000 Trade receivables 120 000 Cash and cash
equivalents 135 000 495 000 Total assets 1 805 000 Equity and
Liabilities Equity Share capital 1 000 000 Preference share capital
250 000 Retained earnings 200 000 1 450 000 Non-current liabilities
10% debentures 100 000 Current Liabilities Trade payables 130 000
Proposed ordinary dividend 75 000 Corporation tax 50 000 255 000
Total liabilities 355 000 Total equity and liabilities 1 805 000
4
Tasks The Finance Manager has requested you to help her
calculate the ratios listed below, and advise her whether the
company met the industry standard. In the case where the company
deviated from the industry standard give a suggestive cause of the
deviation. (round off the percentages to 2 decimal places) a)
Operating profit margin b) Return on capital employed c) Asset
turnover d) Current ratio e) Inventory turnover f) Inventory
holding period g) Receivables collection period h) Payables payment
period i) Gearing j) Interest cover