(solution) In January 2003, Gwano Ltd. a private limited company, decided to

(solution) In January 2003, Gwano Ltd. a private limited company, decided to

In January 2003, Gwano Ltd. a private limited company, decided to float its shares to the public. You have been approached to prepare the accountants report for inclusion in the prospectus.

The following information has been provided:

Extracts from the accountants of Gwano Ltd. for the last five financial years ended 31 March 2003 are given below:

2003

Sh.

?000?

2002

Sh.

?000?

2001

Sh.

?000?

2000

Sh.

?000?

1999

Sh.

?000?

Turnover

37,600

31,000

29,000

24,500

20,000

Cost of sales

26,000

24,900

19,800

18,600

14,300

Administration expenses

2,300

1,600

1,300

1,200

1,100

Selling and distribution expenses

1,700

1,300

1,200

1,100

950

Finance costs

480

480

480

480

480

Profit on disposal of wholesale branch

360

Taxation

1,800

1,520

1,450

1,000

900

Issued ordinary share capital

16,000

16,000

16,000

10,000

10,000

Dividend rate

10%

8%

6%

6%

5%

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