Chapter 3 • Financial statements and their interpretation
3.5*The following are the financial statements of Prospect plc for last year and this year:
Income statement for the year ended 31 December
Last year This year
£000 £000
Turnover 14,006 22,410
Cost of sales (7,496) (11,618)
Gross profit 6,510 10,792
Operating expenses (4,410) (6,174)
Operating profit 2,100 4,618
Interest payable (432) (912)
Profit before taxation 1,668 3,706
Taxation (420) (780)
Profit for the year 1,248 2,926Balance sheet as at 31 December
Last year This year
£000 £000
Non-current assets 8,600 16,470
Current assets
Inventories 2,418 4,820
Trade receivables 1,614 2,744
Other receivables 268 402
Cash 56 8
4,356 7,974
Total assets 12,956 24,444Equity
Ordinary shares of £0.50 each 3,600 3,600
Capital reserves 1,904 1,904
Retained profit 1,370 3,496
6,874 9,000
Non-current liabilities
Loan notes 3,600 7,600
Current liabilities
Trade payables 1,214 2,612
Other payables 848 1,202
Taxation 420 780
Bank overdraft – 3,250
2,482 7,844
Total equity and liabilities 12,956 24,444Note that Prospect plc hopes to retain the bank overdraft on a semi-permanent basis.