You have been supplied with the following data for Jazz Limited and its industryaverages.Balance SheetMarch 31, 2020Assets:CashLiabilities and Equity:Accounts PayableAccrued expensesOther current liabilities12.30031,500Accounts ReceivableMerchandise InventoryPlant and Equipment36,00060,8001,20026,000Long-term debt10% Preference share capitalOrdinary share capitalRetained Earnings151,00034,00040,000100,00027,400Total AssetsP260,100Total Liabilities and EquityP260,100Income StatementMarch 31, 2020Sales225,000Less: Cost of goods soldSelling expensesAdministrative expensesResearch and development exp.Interest expenseEarnings before taxesLess: Income tax (35%)Net income152,50029,50014,8006,5002.900206,20018,8006.58012.2205,000Dividends paid to equity holdersFinancial Ratios of CompanyCurrent ratioStock turnoverCollection periodDebt to EquityInterest coverage ratioAsset turnoverFinancial Ratios of industry2.22.8 times56 days45%10 times1.35 times1.862.5158 days55%7.48 fimes0.58 timesNet profit ratio (before tax)Return on Equity8.36%11.9%5.45%10.9%Required:Analyze the company's strengths and weaknesses in terms of liquidity, solvency andprofitability. |

Financial ratio: Financial ratios can be defined as accounting ratios that reflects the relation…

Answered: Required: Analyze the company's…

Business

Accounting

Required: Analyze the company's strengths and weaknesses in terms of liquidity, solvency and profitability.

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter17: Financial Statement Analysis

Section17.4: Analyzing Financial Statements Using Financial Ratios

Problem 1WT

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Question

100%

You have been supplied with the following data for Jazz Limited and its industry
averages.
Balance Sheet
March 31, 2020
Assets:
Cash
Liabilities and Equity:
Accounts Payable
Accrued expenses
Other current liabilities
12.300
31,500
Accounts Receivable
Merchandise Inventory
Plant and Equipment
36,000
60,800
1,200
26,000
Long-term debt
10% Preference share capital
Ordinary share capital
Retained Earnings
151,000
34,000
40,000
100,000
27,400
Total Assets
P260,100
Total Liabilities and Equity
P260,100
Income Statement
March 31, 2020
Sales
225,000
Less: Cost of goods sold
Selling expenses
Administrative expenses
Research and development exp.
Interest expense
Earnings before taxes
Less: Income tax (35%)
Net income
152,500
29,500
14,800
6,500
2.900
206,200
18,800
6.580
12.220
5,000
Dividends paid to equity holders
Financial Ratios of Company
Current ratio
Stock turnover
Collection period
Debt to Equity
Interest coverage ratio
Asset turnover
Financial Ratios of industry
2.2
2.8 times
56 days
45%
10 times
1.35 times
1.86
2.51
58 days
55%
7.48 fimes
0.58 times
Net profit ratio (before tax)
Return on Equity
8.36%
11.9%
5.45%
10.9%
Required:
Analyze the company's strengths and weaknesses in terms of liquidity, solvency and
profitability. |

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