Section A:

Question 1

YNWA Ltd has been operating as an online fashion retailer for several years. On 1st June 2022 it proposed to expand into high street retailing and planned to buy 25 shops throughout the UK. The financial statements for the last two years are as follows:

Note: The overdraft limit for the company is £810,000

Required:

In your role as the Finance Executive of YNWA Ltd, you are required to evaluate the proposal and advise the company directors. In your evaluation, you should analyse the company’s performance and financial position. You will need to calculate several financial ratios to support your analysis. You should also evaluate the implications that the increase in gearing in 2021 will have on the ordinary shareholders of the company.