calculate the ratio (expressed to two decimal places) that would reflect each of the following: The amount of funds available relative to sales, to pay the company’s expenses other than its cost of sales (expressed as a percentage)The company's net income as a percentage of the company's net sales.The ability of the company to generate profits from its shareholders investments in the company.A measure of the dividend pay-out per share of the company's ordinary shares. The capacity of the company to pay off its current commitments using just its most liquid assets.The degree to which the company’s assets are financed by debt. A measure of how easily the company can pay the interest on its outstanding debt. INFORMATIONExtracts of the financial statements of Turbo Limited for 2022 are given below.TURBO LIMITEDSTATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022SalesCost of salesOperating profitInterest expenseProfit before taxProfit after taxSTATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022Non-current assetsCurrent assetsEquityNon-current liabilitiesCurrent liabilitiesNote:1.2.3.4.Inventories on 31 December 2022 amounted to R360 000.The issued share capital of Turbo Limited consisted of 2 000 000 ordinary shares.Total dividends for the year ended 31 December 2022 amounted to R225 000.Credit terms to debtors are 30 days.R8 000 0005 400 0001 000 00090 000900 000630 000R5 000 0002 000 0005 400 000900 000700 000

The business entities or lenders determine financial ratios to compare different companies' outcomes…

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Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 19BEA

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calculate the ratio (expressed to two decimal places) that would reflect each of the following: The amount of funds available relative to sales, to pay the company’s expenses other than its cost of sales (expressed as a percentage)

The company's net income as a percentage of the company's net sales.

The ability of the company to generate profits from its shareholders investments in the company.

A measure of the dividend pay-out per share of the company's ordinary shares.

The capacity of the company to pay off its current commitments using just its most liquid assets.

The degree to which the company’s assets are financed by debt.

A measure of how easily the company can pay the interest on its outstanding debt.

INFORMATION
Extracts of the financial statements of Turbo Limited for 2022 are given below.
TURBO LIMITED
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022
Sales
Cost of sales
Operating profit
Interest expense
Profit before tax
Profit after tax
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022
Non-current assets
Current assets
Equity
Non-current liabilities
Current liabilities
Note:
1.
2.
3.
4.
Inventories on 31 December 2022 amounted to R360 000.
The issued share capital of Turbo Limited consisted of 2 000 000 ordinary shares.
Total dividends for the year ended 31 December 2022 amounted to R225 000.
Credit terms to debtors are 30 days.
R
8 000 000
5 400 000
1 000 000
90 000
900 000
630 000
R
5 000 000
2 000 000
5 400 000
900 000
700 000

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