60.1K

Verified Solution

Link Copied!

3. Conglomerate Plc has provided you with the following information: Class of business Turnover Turnover Operating Operating profit profit 2020 '000 2019 '000 2020 '000 2019 '000 5,400 6,300 700 950 Corporate Logistics Household products Home deliveries 18,900 5,500 900 580 220 600 210 1563 11,800 26,763 1,500 1,760 Geographical area 2020 '000 2019 '000 2020 '000 2019 '000 610 Asia Continental Europe UK 1,900 3,600 6,300 13,500 4,650 8,613 150 740 840 250 670 11,800 26,763 1,500 1,760 Required (a) Discuss reasons why segmental information is important? Your answer to this part of the question should not be more than 120 words. (4 marks) (b) Calculate the operating profit ratio for Conglomerate Plc for 2019 and 2020, for each class of business and for each geographical area. (4 marks) (c) Analyse segmental information for Conglomerrate Pic using the results in part b. Your answer to this part of the question should not be more than 180 words. (6 marks) (d) Discuss two reasons why companies might chose to raise finance using long term debt. How would the gearing ratio and the net profit ratio be affected if a company replaced part of its equity with debt, all other things remaining the same? Your answer to this part of the question should not be more than 180 words. (6 marks) Total 20 marks

Answer & Explanation Solved by verified expert

See Answer