Compute profitability, liquidity, solvency and capital market standing ratios. Using the ratios computed above, evaluate company’s profitability, liquidity, solvency and capital market standing.
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A:
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A: The Answer is false Refer step2 for explanation
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A: Answer: d. The debt to equity ratio.
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A: Profit volume ratio shows ratio of contribution margin with sales revenue of the business.
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A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…
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Q: profitability ratios
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Compute profitability, liquidity, solvency and capital market standing ratios. Using the ratios computed above, evaluate company’s profitability,
liquidity, solvency and capital market standing.
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- Profit and Loss Account for the year ended 31st December 2021 (Figures are in £000) Particulars XYZ ABC Sales 3,690 4,586 Less: Cost of Goods Sold (Including purchases) (2,146) (2,690) Gross Profit 1,544 1,896 Less: Selling & Distribution Expenses Less: Depreciation (1,103) (1,253) Earnings before Interest & Tax or Operating Profit 441 643 Less: Interest (225) (192) Earnings before Tax 216 451 Less: Taxes (86) (180) Earnings after Tax or Net Profit 130 271 Balance Sheet as at31st December 2021 (Figures are in £000) Assets XYZ ABC Fixed Assets 4,542 4,790 Current Assets Account Receivables 274 313 Inventory 654 702 Cash 140 163 Total Current Assets 1,068 1,178 Total Assets 5,610 5,968 Liabilities Capital 3,824 4,310 Long Term Debt 883 760 Current Liabilities Account Payables…QUESTION 3 De Luna Bhd is a major retailer of branded cars in Peninsular Malaysia. The comparative Statement of Financial Position and Statement of Profit or Loss and Other Comprehensive Income for De Luna Bhd as of 30 June 2019 are as follows: De Luna Bhd Statement of Financial Position As at 30 June 2019 2019 2018 RM'000 RM'000 Non-Current Assets Building Less: Accumulated depreciation 728,000 182,000 598,000 125,000 473,000 546,000 Current Assets Inventory Accounts receivable 252,000 107,000 282,000 90,000 39,000 52.000 463,000 Prepayment Cash 41,000 55.250 455.250 L001.250 Total current asset Total Assets 936,000 Equity Share capital Retained earnings Total equity 402,000 204.000 606.000 312,000 184.000 496.000 Long-Term liability Bond 102,000 132,000 Current liabili ties Accounts payable Salary payable Interest payable Total current liabilities 147,000 155,000 79,250 59.000 293.250 104,000 57.000 308.000 Total Liabilities Total Equity and Liabilities 0.000 936.000 395.250…Income S.atement For the Year Ended June 30, 2020 Net sales P2,430,500 Cost of goods sold (including depreciation of P191,500) P1,073,000 Operating expenses (including depreciation of P100,000) 500,000 7,500 (26,000) (15,000) (44,000) 356,000 P1,851,500 P 579,000 Interest expense Gain on sale of equipment Gain on sale of trading securities Unrealized holding gain on trading securities Income tax Total Net income Texas Company Balance Sheets June 30 2020 2019 Assets P442,000 325,000 P532,000 275,000 141,500 168,500 450,000 43,000 1,095,000 352,000 P3,057,000 Cash Trading Securities(market) Accounts receivable 80,500 Inventories 86,000 Investment in Associates (cost) 43,000 321,500 Land Buildings (net) Equipment (net) Total assets 242,500 P1,540,500 Liabilities & Equity P 93,500 P107,500 50,000 41,500 156,500 Accounts payable Short-term bank loans payable Accrued operating expenses Income tax payable Bonds payable (net) Common stock, P10 par value Additional paid in capital Retained…
- Sound Break CorporationIncome and Retained Earnings StatementFor the year Ended December 31, 2020Net Sales P1,000,000Cost of Goods Sold:Inventory, Dec. 31, 2019 P250,000Purchases 720,000Total Goods Available P970,000Inventory 220,000 750,000Gross Margin on Sales P 250,000Selling and Administrative (including Depreciation of P20,000) 125,000Net Income before Tax P 125,000Provision for Income Tax 35,000Net Income for the Year P 90,000Retained Earnings, beginning 130,000Total P 220,000Dividends Paid 30,000Retained Earnings, December 31, 2020 P 190,000 Sound Break CorporationBALANCE SHEETDecember 31, 2019 and 2020 ASSETS 2019 2020Current Assets:Cash P 75,000 P 85,000Marketable Securities 25,000 25,000Trade Receivables, net 185,000 245,000Inventory, at cost 250,000 220,000Prepaid Expenses 15,000 10,000Total Current Assets P550,000 P585,000Property and Other Assets:Equipment, net P340,000 P320,000Other Assets 15,000 15,000Total Property and Other Assets P355,000 P335,000 Total Assets…Lancer Company's preliminary income statement for 2021 and its reported income statement for 2020 are given below. 2021 2020 1,350,000 (648,0001 702,000 (172,500) (162.000 367.500 Sales Revenues 1,320,000 (630.000 690,000 Cost of Goods Sold Gross Profit Depreciation Other Expenses (172,500) (153.000 364.500 Net Income Lancer's records reveal the following information: (1) Lancer neglected to record S8,000 of supplies expense at the end of 2020, so the supplies inventory was overstated at the end of 2020. Consequently, the supplies expense computed for 2021 included the additional amount of supplies used in 2020. (2) On 1/1/19, Lancer purchased a machine for $120,000. Although the machine was expected to have an eight-year life, it was erroneously expensed in recording the purchase. The appropriate depreciation method for this machine is double-declining-balance with no residual. (3) At the end of 2021, Lancer decided to change its inventory costing method from the FIFO costing method…DEVCON INDUSTRIES LIMITED Income Statement For the years ended Dec. 31, 2018 and 2019 2018 2019 so00's s000's Sales 900000 1125000 Cost of Goods Sold 300000 306600 Gross Profit 600000 818400 Selling and Administrative Expenses 150000 156000 Depreciation Expense 54000 57000 Advertising Expenses 18000 21000 Earnings Before Interest and Taxes 378000 584400 Interest Expense 3000 3000 Taxable Income 375000 581400 Taxation (35%) 131250 203490 Net Income 243750 377910 Dividends (40%) 97500 151164 Addition to Retained Earnings 146250 226746 Additional Information Share Price 21 27.3 Ordinary Shares Outstanding 120000000 144000000 DEVCON INDUSTRIES LIMITED Statement of Financial Position As at Dec. 31, 2018 and 2019 ASSETS 2018 2019 LIABILITIES & EQUITY 2018 2019 Current Assets s00's s000's Current Liabilities so00's So00's Inventories 264000 276000 Accounts Payables Notes Payables 138000 114000 Accounts Receivables 294000 330000 150900 132654 Cash and Equivalents 210900 270000 288900 246654…
- Dela Rosa Company Company The income statement for the year ended December 31, 2020, for Dela Rosa Company Comnany contains the following condensed information. Dela Rosa Company Company Income Statement For the Year Ended December 31, 2X20 Sales revenue Cost of goods sold Operating expenses (excluding depreciation) Depreciation expense Loss on disposal of plant assets Income before income taxes Income tax expense Net income P6,583,000 P2,810,000 2,086,000 880,000 24.000 5,800.000 783,000 353,000 P430,000 The P24,000 loss resulted from selling equipment for P270,000 cash. The equipment was purchased at a cost of P750,000. The following balances are reported on Dela Rosa's comparative balance sheets at December 31, Dela Rosa Company Company Comparative Balance Sheets Cash Accounts receivable Inventory Accounts payable 2X20 P672,000 775,000 834,000 521,000 2X19 P130,000 610,000 867,000 501,000 Income tax expense of P353,000 represents the amount paid in 2020. Dividends declared and paid…Module pute Net Operating Profit after Tax Refer to the balance sheet information below for Home Depot. Feb. 3, 2019 Jan. 28, 2018 $35,891 $34,794 1,511 3,056 $37,402 $37,850 $14,177 $13,640 24,822 22,974 $38,999 $36,614 Operating assets Nonoperating assets Total assets $ millions Operating liabilities Nonoperating liabilities Total liabilities Net sales Operating expense before tax Net operating profit before tax (NOPBT) Other expense Income before tax Tax expense Net income Assume a statutory tax rate of 22%. a. Compute NOPAT for the year ended Feb. 3, 2019 using the formula: NOPAT = Net income + NNE Net income NNE NOPAT $ 9,453 $ $ $91,973 78,772 13,201 828 12,373 2,920 $9,453 7,361 * $ 16814 b. Compute NOPAT for the year ended Feb. 3, 2019 using the formula: NOPAT = NOPBT - Tax on operating profit NOPBT Tax on operating profit 7,361 * $ 10,296.78 x $ NOPAT -2936LOGIC COMPANYComparative Income StatementFor Years Ended December 31, 2019 and 2020 2020 2019 Gross sales $ 19,000 $ 15,000 Sales returns and allowances 1,000 100 Net sales $ 18,000 $ 14,900 Cost of merchandise (goods) sold 12,000 9,000 Gross profit $ 6,000 $ 5,900 Operating expenses: Depreciation $ 700 $ 600 Selling and administrative 2,200 2,000 Research 550 500 Miscellaneous 360 300 Total operating expenses $ 3,810 $ 3,400 Income before interest and taxes $ 2,190 $ 2,500 Interest expense 560 500 Income before taxes $ 1,630 $ 2,000 Provision for taxes 640 800 Net income $ 990 $ 1,200 LOGIC COMPANYComparative Balance SheetDecember 31, 2019 and 2020 2020 2019 Assets Current assets: Cash $ 12,000 $ 9,000 Accounts receivable 16,500 12,500 Merchandise inventory 8,500 14,000 Prepaid expenses 24,000 10,000 Total current assets $ 61,000 $ 45,500 Plant and…
- LOGIC COMPANYComparative Income StatementFor Years Ended December 31, 2019 and 2020 2020 2019 Gross sales $ 19,000 $ 15,000 Sales returns and allowances 1,000 100 Net sales $ 18,000 $ 14,900 Cost of merchandise (goods) sold 12,000 9,000 Gross profit $ 6,000 $ 5,900 Operating expenses: Depreciation $ 700 $ 600 Selling and administrative 2,200 2,000 Research 550 500 Miscellaneous 360 300 Total operating expenses $ 3,810 $ 3,400 Income before interest and taxes $ 2,190 $ 2,500 Interest expense 560 500 Income before taxes $ 1,630 $ 2,000 Provision for taxes 640 800 Net income $ 990 $ 1,200 LOGIC COMPANYComparative Balance SheetDecember 31, 2019 and 2020 2020 2019 Assets Current assets: Cash $ 12,000 $ 9,000 Accounts receivable 16,500 12,500 Merchandise inventory 8,500 14,000 Prepaid expenses 24,000 10,000 Total current assets $ 61,000 $ 45,500 Plant and…Excerpts from the annual report of XYZ Corporation follow: 2019 $675,138 $241,154 $64,150 $93,650 $25,100 2020 Cost of goods sold Inventory Net income $754,661 $219,686 $31,185 $68,685 $26,900 Retained earnings LIFO reserve Tax rate 20% 20% If XYZ used FIFO, its net income for fiscal 2020 would be O a. $34,165 O b. $30,375 O c. $32,625 d. $36,545The comparative statements of Blossom Company are presented here: Blossom CompanyIncome StatementsFor the Years Ended December 31 2020 2019 Net sales $1,899,640 $1,759,600 Cost of goods sold 1,067,640 1,015,100 Gross profit 832,000 744,500 Selling and administrative expenses 509,100 488,100 Income from operations 322,900 256,400 Other expenses and losses Interest expense 23,500 21,500 Income before income taxes 299,400 234,900 Income tax expense 93,500 74,500 Net income $205,900 $160,400 Blossom CompanyBalance SheetsDecember 31 Assets 2020 2019 Current assets Cash $60,100 $64,200 Debt investments (short-term) 74,000 50,000 Accounts receivable 126,900 111,900 Inventory 127,500 117,000 Total current assets 388,500 343,100 Plant assets…