The following are the summarised financial statements of Ingrid Ltd and Epona Ltd, two firms that operate in identical industries. Summarised statements of profit and loss Ingrid Ltd Sales revenue Cost of goods sold Gross profit Overhead expenditure (including interest) Profit for the year ASSETS Non-current assets. Current assets Inventories Trade receivables Bank Summarised statements of financial position Total assets EQUITY AND LIABILITIES Equity Share capital and retained earnings Non-current liabilities 5% long-term loan Current liabilities Trade payables Bank overdraft £'000 Total current liabilities Total liabilities Total equity and liabilities 6,140 (4,600) 1,540 (1,180) 360 790 1,240 760 230 2,230 3,020 1,540 540 940 Epona Ltd £'000 7,320 (5,656) 1,664 (1,300) 364 940 1,480 3,020 1,040 1,840 1,240 3,080 4,120 2,200 1,080 840 1,920 1,920 4, 120 Note: The rate of interest on Epona's overdraft is 10 per cent per annum.

The following are the summarised financial statements of Ingrid Ltd and Epona Ltd, two firms that operate in identical industries. Summarised statements of profit and loss Ingrid Ltd Sales revenue Cost of goods sold Gross profit Overhead expenditure (including interest) Profit for the year ASSETS Non-current assets. Current assets Inventories Trade receivables Bank Summarised statements of financial position Total assets EQUITY AND LIABILITIES Equity Share capital and retained earnings Non-current liabilities 5% long-term loan Current liabilities Trade payables Bank overdraft £'000 Total current liabilities Total liabilities Total equity and liabilities 6,140 (4,600) 1,540 (1,180) 360 790 1,240 760 230 2,230 3,020 1,540 540 940 Epona Ltd £'000 7,320 (5,656) 1,664 (1,300) 364 940 1,480 3,020 1,040 1,840 1,240 3,080 4,120 2,200 1,080 840 1,920 1,920 4, 120 Note: The rate of interest on Epona's overdraft is 10 per cent per annum.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 2MC

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