(a) The following information relates to the draft fi nancial statements of Deltoid.
Summarised statements of fi nancial position as at:
Summarised income statements for the years ended:
The following additional information is available:
(i) Property, plant and equipment is made up of:
(ii) On 1 July 2009 there was a bonus issue of shares from share premium of one new share for every 10 held.
On 1 October 2009 there was a fully subscribed cash issue of shares at par.
(iii) The 10% loan note is due for repayment on 30 June 2010. Deltoid is in negotiations with the loan provider to refi nance the same amount for another fi ve years.
(iv) The fi nance costs are made up of:
For year ended:
Required:
(i) Prepare a statement of cash fl ows for Deltoid for the year ended 31 March 2010 in accordance with IAS 7 Statement of cash fl ows, using the indirect method; (12 marks)
(ii) Based on the information available, advise the loan provider on the matters you would take into consideration when deciding whether to grant Deltoid a renewal of its maturing loan note. (8 marks)
(b) On a separate matter, you have been asked to advise on an application for a loan to build an extension to a sports club which is a not-for-profi t organisation. You have been provided with the audited fi nancial statements of the sports club for the last four years.
Required:
Identify and explain the ratios that you would calculate to assist in determining whether you would advise that the loan should be granted. (5 marks)