Answered: A summary of the statement of financial…

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter2: Analysis Of Financial Statements

Section: Chapter Questions

Problem 20PROB

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Question

A summary of the statement of financial position of M at 31 March 20X0 was as follows

$'000

Total assets less current liabilities 120

Ordinary share capital 40

Share premium account 10

Retained profit 10

5% loan stock 60

120

If the operating profit for the year ended 31 March 20X0 was $15,000, what is the return on capital

employed?

A 12.5%

B 25%

C 30%

D 37.5%

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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