Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN: 9780357033609
Author: Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher: Cengage Learning
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Chapter 2, Problem 4FPE
Summary Introduction
To prepare: The income and expenses statement of person R and person M for the year ending December 31, 2020.
A personal balance sheet provides a snapshot of an individual’s wealth for a particular period of time. It shows the assets and liabilities and the net worth of an individual.
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Hugo Garcia is preparing his balance sheet and income and expense statementfor the year ending December 31, 2020. He is having difficulty classifying six items and sks for your help. Which,if any, of the following transactions are assets, liabilities, income, or expense items?a. Hugo rents a house for $1,350 a month.b. On June 21, 2020 Hugo bought diamond earrings for his wife and charged them using his Visa card. The earringscost $900, but he hasn’t yet received the bill.c. Hugo borrowed $3,500 from his parents last fall, but so far, he has made no payments to them.d. Hugo makes monthly payments of $225 on an installment loan; about half of it is interest, and the balance isrepayment of principal. He has 20 payments left, totaling $4,500.e. Hugo paid $3,800 in taxes during the year and is due a tax refund of $650, which he hasn’t yet received.f. Hugo invested $2,300 in a mutual fund.g. Hugo’s Aunt Lydia gave him a birthday gift of $300.
Dr Mo started his own medical practice at the end of 2020. At the...
Dr Mo started his own medical practice at the end of 2020. At the end of his second year in business he thinks it prudent to compare his 2021 and 2022 financial results to reassess if it's better for him to work in the private sector or return to public service. You are his financial manager, and he provides you with the following financial information:
Gross Profit Margin - 35%Net Profit Margin - 11%Return on capital employed(ROCE) - 13%Current Ration - 1.4:1As at 31 December 2022Revenue - R5,000,000Cost of Sales - R2,880,000Total running costs - R1,536,000Current Assets - R660,00Current Liabilities - R600,000Total Capital Employed - R2,560,000
Required:
1. Explain to Dr Mo, an exceptional medical doctor but sadly lacking in financial acumen, give him five advantages and five disadvantages of using ratios to analyse and interpret performance.
Dr Mo started his own medical practice at the end of 2020. At the...
Dr Mo started his own medical practice at the end of 2020. At the end of his second year in business he thinks it prudent to compare his 2021 and 2022 financial results to reassess if it's better for him to work in the private sector or return to public service. You are his financial manager, and he provides you with the following financial information:
Gross Profit Margin - 35%Net Profit Margin - 11%Return on capital employed(ROCE) - 13%Current Ration - 1.4:1As at 31 December 2022Revenue - R5,000,000Cost of Sales - R2,880,000Total running costs - R1,536,000Current Assets - R660,00Current Liabilities - R600,000Total Capital Employed - R2,560,000
Required:1. Tabulate the 2021 ratios and your calculated 2022 ratios. comment on the changes in the ratios from one year to the next. In your assessment, provide two plausible reasons that could explain the financial trends observed.
Chapter 2 Solutions
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
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