Gce Model Questions Vol1 2022 Financial Accounting Question 40

A company's statement of financial position before any adjustments shows: Share capital £200,000 (100,000 ordinary shares of £2 each), share premium £50,000, retained earnings £120,000; Plant cost £300,000, accumulated depreciation £120,000; Inventory £80,000, trade receivables £70,000, cash £30,000; Trade payables £60,000, bank overdraft £20,000; Long‑term loan £100,000. During the year the plant is revalued to a fair value of £250,000 and the revaluation surplus is transferred to revaluation reserve. The company also issues 10,000 new ordinary shares at £5 each (nominal £2, premium £3) and uses the proceeds to repay £30,000 of the long‑term loan. Prepare the statement of financial position after these transactions and give the debt‑to‑equity ratio (total debt ÷ total equity) to two decimal places.