ABSTRACT
Net current assets 2 300 7 000
Less: Creditors due after one year 1 800 5 200
Capital and reserves Called up share capital: 9.6 million ordinary 25p shares 2 400 Share premium account 600 Profit and loss account 2 200
5 200
Solution
9.2 Highsight Properties Limited
HIGHSIGHT PROPERTIES LIMITED Balance sheet at 31 July 2000
£’000 Fixed assets
Land and buildings, at valuation 5 000 Net current assets 350
5 350
Less: Creditors due after one year 1 500 3 850
Capital and reserves Called up share capital 2 000 Revaluation reserve 1 600 Profit and loss account 250
3 850
Notes 1 Did you remember to change the description of ‘Fixed assets’ in the
balance sheet from ‘at cost less accumulated depreciation’ to ‘at valuation’? (The date of the valuation should be given in a note to the accounts.)
2 Notice that the debt ratio has fallen 40 per cent to 28 per cent as a result of the revaluation (even though nothing has ‘really’ changed). What would you expect to happen to: (a) return on net assets? (b) return on equity? (c) interest cover?
