Johny Plc is a manufacturer of exclusive brands of whiskey

Johny Plc is a manufacturer of exclusive brands of whiskey and has been in operation for the past 5 years. Due to an increase in demand and marketing of a brand new whiskey, the company has been experiencing a slow growth and this has impacted on its profits. Profits after tax for the year ended 31 December 2018 was Rs 825,000 and has steadily increased to Rs 957,000 for the same period ending 2019

In view of commercializing the brand new whiskey, the company has contracted a long term loan with an implicit interest rate of 10% per annum. Apparently, the bank’s credit analysts have been very critical on the overall performance and financial position of Johny Plc before sanctioning the loan.

The board of directors has appointed you as the company’s Accountant and the following ratios have been calculated based on the published accounts for the year 2019. The latest industry average ratios have also been compiled.

Required:

(a) Assuming the role of the Accountant, write a comprehensive report to the board of directors analysing the profitability, liquidity, efficiency and gearing position of the company by comparing the results of the company against the industry average. (You may make any assumptions).

(b) Discuss the mandatory disclosures which Johny Plc will have to report in its statement of cash flows.
 

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