What sources of finance should Alphabet Holdings Plc consider to finance the investment in either ALD Ltd or ZEE Ltd? Critically evaluate the options.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What sources of finance should Alphabet Holdings Plc consider to finance the investment in either ALD Ltd or ZEE Ltd? Critically evaluate the options.

Statements of Profit or Loss (SOPL)
ALD Ltd
Turnover
Cost of sales
Gross profit
Administrative expenses
Other operating income
Operating profit
2,244,560 100%
Profit for the year
vertical analysis
(1,127,592) 50.24%
1,116,968 49.76%
(635,096) 28.29%
22,030 0.98%
Other interest receivable and similar income5,500
Interest payable and similar
charges
503,902
0
Profit on ordinary activities before 509,402
taxation
Tax on profit on ordinary activities
(56,810)
452,592
22.45%
0.25%
0.00%
22.69%
2.53%
20.16%
ZEE Ltd
vertical analysis
£
2,772,375 100%
(751,704) 27.11%
2,020,671
(1,224,413) 44.16%
0
0.00%
796,259
2,262
0.08%
(96,263) 3.47%
702,258 25.33%
(208,056) 7.50%
494,202 17.83%
Transcribed Image Text:Statements of Profit or Loss (SOPL) ALD Ltd Turnover Cost of sales Gross profit Administrative expenses Other operating income Operating profit 2,244,560 100% Profit for the year vertical analysis (1,127,592) 50.24% 1,116,968 49.76% (635,096) 28.29% 22,030 0.98% Other interest receivable and similar income5,500 Interest payable and similar charges 503,902 0 Profit on ordinary activities before 509,402 taxation Tax on profit on ordinary activities (56,810) 452,592 22.45% 0.25% 0.00% 22.69% 2.53% 20.16% ZEE Ltd vertical analysis £ 2,772,375 100% (751,704) 27.11% 2,020,671 (1,224,413) 44.16% 0 0.00% 796,259 2,262 0.08% (96,263) 3.47% 702,258 25.33% (208,056) 7.50% 494,202 17.83%
Statements of Financial Position (SOFP)
ALD Ltd
Fixed assets
Tangible assets
Total Non Current Assets
Current ass ets
Trade receivables
Cash at bank and in hand
Total Current Assets
Total Assets
Liabilities
Current liability: Trade payables
Non current liability: Bank borrowing
Total Liabilities
Equity and reserves
Called up share capital
Profit and loss account
Total Equity
Total Equity and Liabilities
£
97,600
10.5%
97,600 10.5%
234,080 25.2%
598,815 64.4%
832,895 89.5%
930,495 100.0%
vertical analysis
477,900 51.4%
0
477,900
3
452,592
452,595
930,495
0.0%
51.4%
0.0%
48.6%
48.6%
100.0%
4
ZEE Ltd
75,000
75,000
1,174,837
440,119
37.5%
659,718 56.2%
1,099,837
93.6%
vertical analysis
680,632
6.4%
6.4%
300,763 25.6%
3
494,202
494,205
379,869 32.3%
1,174,837
100.0%
57.9%
0.0%
42.1%
42.1%
100.0%
Transcribed Image Text:Statements of Financial Position (SOFP) ALD Ltd Fixed assets Tangible assets Total Non Current Assets Current ass ets Trade receivables Cash at bank and in hand Total Current Assets Total Assets Liabilities Current liability: Trade payables Non current liability: Bank borrowing Total Liabilities Equity and reserves Called up share capital Profit and loss account Total Equity Total Equity and Liabilities £ 97,600 10.5% 97,600 10.5% 234,080 25.2% 598,815 64.4% 832,895 89.5% 930,495 100.0% vertical analysis 477,900 51.4% 0 477,900 3 452,592 452,595 930,495 0.0% 51.4% 0.0% 48.6% 48.6% 100.0% 4 ZEE Ltd 75,000 75,000 1,174,837 440,119 37.5% 659,718 56.2% 1,099,837 93.6% vertical analysis 680,632 6.4% 6.4% 300,763 25.6% 3 494,202 494,205 379,869 32.3% 1,174,837 100.0% 57.9% 0.0% 42.1% 42.1% 100.0%
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