\text { Brad's Engineering Pty Ltd }

\begin{array}{lll}&2015&2014\\\text { Statement of financial positions as at } 30 \text { June }&\$&\$\\\text { Total Current Assets } & 11,080 & 10,280 \\\text { Total Fixed Assets } & 75,000 & 42,000\\\text { TOTAL ASSETS }&\$86,080&\$52,280\\\text { Total Current Liabilities } & 3,400 & 1,960 \\\text { Long-term Liabilities } & \underline{20,000} & 8,500 \\\text { TOTAL LIABILITIES }&\$23,400&\$10,460\\\\\text { NET ASSETS (Assets - Liabilities) } & \$ 62,680 & \$ 41,820 \\\\\text { SHAREHOLDERS' EQUITY } & & \\\text { Share capital } & 40000 & 30000 \\\text { Reserves and retained profits } & 22,680 & 11,820\\&\$62,60&\$41,820\\\\\text { Additional Information: }\\& 2015 & 2014 \\\text { Net profit after interest \& tax } & \$ 10,860 & \$ 6,000 \\\text { Interest expense } & 2,000 & 900 \\\text { Taxation expense } & 3,000 & 1,500\end{array}

REQUIRED:
a)From the information provided above,calculate each of the following ratios for each of the years ending 30 June 2014 and 2015.
Gearing ratio.Use formula

\frac{\text {Long term liabilities }}{\text { Share capital and reserves + long term liabilities}}

Interest cover ratio.Use formula

\frac{\text {Profit before interest and tax }}{\text {Interest }}

b)Comment on the movements in the ratios over the two years and the adequacy of the level of gearing and interest cover.

Use This Data to Calculate Earnings Per Ordinary Share (EPS)for

Multiple Choice

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