INTERPRETING FINANCIAL STATEMENTS 91
Table 7.3 Ottakar’s Balance Sheet
in £’000 2001 2000
Fixed assets
Intangible assets 793 838
Tangible assets 17,692 17,18718,485 18,025Current assets
Stocks 14,692 13,601
Debtors^1 2,798 2,612
Cash at bank and in hand 370 –17,860 16,213
Creditors:
Amounts falling due within one year^2 −14,379 −13,729Net current assets 3,481 2,484Total assets less current liabilities 21,966 20,509
Creditors:
Amounts falling due after more than one year −7,920 −7,948
Provision for liabilities and charges − 403 − 207Net assets 13,643 12,354Capital and reserves
Called-up share capital 1,006 1,006
Share premium account 6,041 6,041
Capital redemption reserve 512 512
Profit and loss account 6,084 4,795Equity shareholders’ funds 13,643 12,354(^1) The notes disclose that these are predominantly prepayments, with trade debtors
comprising only £301,000.
(^2) The notes disclose that of the current liabilities, £10,027 are trade creditors and
£3,117 accruals.
Ratios for gearing are shown in Table 7.6. These ratios reflect the reduction
in long-term debt and the increase in shareholders’ funds. Although there has
been an increase in interest expense, the increase in operating profit has doubled
the interest cover. Borrowings are one-third of capital employed, which is fairly
conservative, while the interest cover provides good security for lenders.
The ratio for activity/efficiency is shown in Table 7.7. Despite a higher asset
base, the 18.3% sales increase resulted in an improved efficiency ratio. As reflected
in the acid test ratio (Table 7.5), working capital is affected significantly by the
low stock turn (3.6 means that on average books are held for 101 days before they
are sold). It is also reflected in the average time it takes to pay creditors (over