Please need help on this 2 Ratio Analysis questions O RetulCapital Empioyed(b.) Acid test ratio;(g) Net profit margin(c.) Debtors collection period (in months);(d.) Creditors payment period (in months);(e.) Rate of stock turnover;(h) Gross profit margin(i) Price/Earnings ratioQUESTION 2The following is a summary of the Financial Statements of two companies dealing in similarproducts in Ghana.The two companies' Statement of Profit or Loss for the year ended 30th September, 2019Alu LimitedBlu LimitedGH¢600,000GH¢600,000GH¢GH¢RevenueInventoriesPurchases96,000468,00024,000450,000(36,000)(144,000)Closing inventoriesCost of sales420,000180,000(142,200)37,800438.000Gross profitOperating expensesOperating profit162,000_(127,440)34,560The two companies' Statement of Financial Position as at 30th September, 2019Alu LimitedBlu LimitedGH¢240,000GH¢GH¢390,000GH¢Non- current Assets:Current assets:Inventories144,00036,00012,75059,250Trade receivables51,00015,000Bank and Cash210,000600,000108.000348,000Stated capitalRetained profit240,00048,000240.000300,000Current Liabilities:Trade payablesExpenses accrued45,00015,0004200060,000348,0001800060,000600,000Required:a) Calculate the following ratios for each company.i)Gross profit marginNet profit marginCurrent ratioii)i)ii)Acid Test/Quick ratiob) Using the information in (A) above, interpret the results of the ratios. 12:41 AEdit50FINANCIAL RATIOSQUESTION 1The following financial statements were prepared by the accountants of KOOWOODCompany LimitedKOowoÓD Company LimitedStatement of Profit or Loss and Retained Earnings for the year ended 31st December, 2018GH¢GH¢1,360,000SalesLess cost of sales:Opening InventoryAdd purchases331,500969,0001,300,500(484,500)Less closing InventoryGross profitAdministration expensesSelling and distribution expensesOperating profitFinancial expensesNet profit for the yearDividend paid(816,000)544,000260,000200,000460,00084,000(16,000)68.000(51,000)17,00025,50042,500Income surplus b/fIncome surplus c/f*ignore taxationStatement of financial position as at 31st December, 2018GH¢GH¢GHCNon Current Assets at Cost510,000Less depreciation170,000340,000Current Assets:InventoryTrade ReceivablesCash and bank484,500187,00093,500765,000Current liabilities:Trade PayablesWorking CapitalCapital Employed(255,000)510,000850,000Financed by:Stated capitalIncome surplus680,00042,500722,500Non-current liability7% loạn Note127,500850,000Earnings per share GH¢0.10Current market price/share GH¢2.00You are required to calculate for KOOWOOD Limited Company the following(a.) Current ratio%3;(b.) Acid test ratio;(c.) Debtors collection period (in months);(d.) Creditors payment period (in months);(e.) Rate of stock turnover;(f) Return on Capital Employed(g) Net profit margin(h) Gross profit margin(i) Price/Earnings ratioDOToolsMobile ViewShare

2) Accounting ratios are the comparison between two or more financial data from the financial…

QUESTION 2 The following is a summary of the Financial Statements of two companies dealing in similar products in Ghana. The two companies' Statement of Profit or Loss for the year ended 30h September, 2019 Alu Limited Blu Limited GH¢ GH¢ GH¢ GH¢ 600,000 Revenue 600,000 24,000 450,000 Inventories 96,000 468,000 Purchases Closing inventories Cost of sales (144,000) (36,000) 420,000 180,000 (142,200) 37,800 438,000 162,000 Gross profit Operating expenses Operating profit _(127,440) 34,560 The two companies' Statement of Financial Position as at 30th September, 2019 Alu Limited Blu Limited GH¢ GH¢ 390,000 GH¢ GH¢ 240,000 Non- current Assets: Current assets: Inventories 144,000 36,000 Trade receivables 51,000 12,750 Bank and Cash 15,000 210,000 600,000 59,250 108,000 348,000 Stated capital Retained profit Current Liabilities: 240,000 300,000 240,000 48,000 Trade payables Expenses accrued 45,000 42000 15,000 60,000 600,000 18000 60,000 348,000 Required: a) Calculate the following ratios for each company. Gross profit margin i) Net profit margin Current ratio i) Acid Test/Quick ratio b) Using the information in (A) above, interpret the results of the ratios.

QUESTION 2 The following is a summary of the Financial Statements of two companies dealing in similar products in Ghana. The two companies' Statement of Profit or Loss for the year ended 30h September, 2019 Alu Limited Blu Limited GH¢ GH¢ GH¢ GH¢ 600,000 Revenue 600,000 24,000 450,000 Inventories 96,000 468,000 Purchases Closing inventories Cost of sales (144,000) (36,000) 420,000 180,000 (142,200) 37,800 438,000 162,000 Gross profit Operating expenses Operating profit _(127,440) 34,560 The two companies' Statement of Financial Position as at 30th September, 2019 Alu Limited Blu Limited GH¢ GH¢ 390,000 GH¢ GH¢ 240,000 Non- current Assets: Current assets: Inventories 144,000 36,000 Trade receivables 51,000 12,750 Bank and Cash 15,000 210,000 600,000 59,250 108,000 348,000 Stated capital Retained profit Current Liabilities: 240,000 300,000 240,000 48,000 Trade payables Expenses accrued 45,000 42000 15,000 60,000 600,000 18000 60,000 348,000 Required: a) Calculate the following ratios for each company. Gross profit margin i) Net profit margin Current ratio i) Acid Test/Quick ratio b) Using the information in (A) above, interpret the results of the ratios.

Financial & Managerial Accounting

13th Edition

ISBN:9781285866307

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter13MJ: Mornin' Joe

Section: Chapter Questions

Problem 3IFRS

See similar textbooks

Similar questions

Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 20Y8 Instructions Inventory turnover
Sales transactions Using transactions listed in P4-2, indicate the effects of each transaction on the liquidity metric working capital and profitability metric gross profit percent. Indicate the gross profit percent for each sale (rounding to one decimal place) in parentheses next to the effect of the sale on the company’s ability to attain an overall gross profit percent of 30%.
2. Net income, 185,000 Appendix 2 PR 5-10A Periodic inventory accounts, multiple-step income statement, closing entries On December 31, 20Y5, the balances of the accounts appearing in the ledger of Wyman Company are as follows: Instructions 1. Does Wyman Company use a periodic or perpetual inventory system? Explain. 2. Prepare a multiple-step income statement for Wyman Company for the year ended December 31, 20Y5. The inventory as of December 31, 20Y5, was 305,000. The estimated cost of customer returns inventory for December 31, 20Y5, is estimated to increase to 40,000. 3. Prepare the closing entries for Wyman Company as of December 31, 20Y5. 4. What would be the net income if the perpetual inventory system had been used?
Appendix Cost of goods sold and related items The following data were extracted from the accounting records of Harkins Company for the year ended April 30, 20Y8: Estimated returns of current year sales 11,600 Inventory, May 1,20Y7 380,000 Inventory, April 30,20Y8 415,000 Purchases 3,800,000 Purchases returns and allowances 150,000 Purchases discounts 80,000 Sales 5,850,000 Freight in 16,600 a. Prepare the Cost of goods sold section of the income statement for the year ended April 30. 20Y8, using the periodic inventory system. b. Determine the gross profit to be-reported on the income statement for the year ended April 30, 20Y8. c. Would gross profit be different if the perpetual inventory system was used instead of the periodic inventors-system?
Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 20Y8 Instructions Days’ sale in receivable
Inventory Analysis Callahan Company reported the following information for the current year. Required: 1. Compute Callahans (a) gross profit ratio, (b) inventory turnover ratio, and (c) average days to sell inventory. (Round all answers to two decimal places.) 2. Explain the meaning of each number.
Profitability ratios The following selected data were taken from the financial statements of Robinson Inc. for December 31, 2016, 2015 and 2014: December31 2016 2015 2014 Total assets......................................... 4,800,000 4,400,000 4,000,000 Notes payable (8% interest)........................... 2,250,000 2,250,000 2,250,000 Common stock...................................... 250,000 250,000 250,000 Preferred 4% stock, 100 par (no change during year)........................... 500,000 500,000 500,000 Retained earnings................................... 1,574,000 1,222,000 750,000 The 2016 net income was 372,000, and the 2015 net income was 492,000. No dividends on common stock were declared between 2014 and 2016. a. Determine the rate earned on total assets, the rate earned on stockholders equity, and the rate earned on common Stockholders equity for the years 2015 and 2016. Round to one decimal place. b. What conclusions can be drawn from these data as to the companys profitability?
Lower-of-cost-or-market inventory Data on the physical inventory of Katus Products Co. as of December 31 follows: Description Inventory Quantity Market Value per Unit (Net Realizable Value) A54 37 56 C77 24 178 F66 30 132 H83 21 545 K12 375 5 Q58 90 18 S36 8 235 V97 140 20 Y88 17 744 Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows: Description Last Purchases Invoice Next-to-the-Last Purchases Invoice Quantity Purchased Unit Cost Quantity Purchased Unit Cost A54 30 60 40 58 C77 25 174 15 180 F66 20 130 15 128 H83 6 547 15 540 K12 500 6 500 7 Q58 75 25 80 26 S36 5 256 4 260 V97 100 17 115 16 Y88 10 750 8 740 Instructions Determine the inventory at cost and also at the lower of cost or market, using the first-in, first-out method. Record the appropriate unit costs on the inventory sheet, and complete the pricing of the inventory. When there are two different unit costs applicable to an item, proceed as follows: 1. Draw a line through the quantity, and insert the quantity and unit cost of the last purchase. 2. On the following line, insert the quantity and unit cost of the next-to-the-last purchase. 3. Total the cost and market columns and insert the lower of the two totals in the LCM column. The first item on the inventory sheet has been completed as an example. Inventory Sheet December 31 Description Unit Inventory Quantity Cost per Unit Market Value per Unit(Net Realizable Value) Total Cost Market LCM A54 37 30 60 56 1,800 1,680 7 58 56 406 392 2,206 2,072 2,072
Appendix Periodic inventory accounts, multiple-step income statement, closing entries On December 31, 2018, the balances of the accounts appearing in the ledger of Wyman Company are as follows: Cash 13,500 Dividends 25,000 Accounts Receivable 72,000 Sales 3,280,000 Inventory, January 1, 2018 257,000 Purchases 2,650,000 Estimated Returns Inventory, January 1,2018 35,000 Purchases Returns and Allowances 93,000 Purchases Discounts 37,000 Office Supplies 3,000 Freight In 48,000 Prepaid Insurance 4,500 Sales Salaries Expense 300,000 Land 150,000 Advertising Expense 45,000 Store Equipment 270,000 Delivery Expense 9,000 Accumulated Depreciation Store Equipment 55,900 Depreciation Expense Store Equipment 6,000 Office Equipment 78,500 Miscellaneous Selling Expense 12,000 Accumulated Depreciation Office Equipment 16,000 Office Salaries Expense 175,000 Rent Expense 28,000 Accounts Payable 77,800 Insurance Expense 3,000 Salaries Payable 3,000 Office Supplies Expense 2,000 Customer Refunds Payable 50,000 Depreciation Expense Office Equipment 1,500 Unearned Rent 8,300 Notes Payable 50,000 Miscellaneous Administrative Expense 3,500 Common Stock 150,000 Rent Revenue 7,000 Retained Earnings 365,600 Interest Expense 2,000 Instructions 1. Does Wyman Company use a periodic or perpetual inventory system? Explain. 2. Prepare a multiple-step income statement for Wyman Company for the year ended December 31, 2018. The inventory as of December 31, 2018, was 305,000. The estimated cost of customer returns inventory for December 31, 2018, is estimated to increase to 40,000. 3. Prepare the closing entries for Wyman Company as of December 31, 2018. 4. What would be the net income if the perpetual inventory system had been used?