Data extracts from Gamma's accounts are shown below Turnover Gross Profit Expenses Operating Profit Interest and Tax Profit for Year Non-current assets Inventory Receivables Cash at Bank Payables Other Current Liabilities Net current assets Shareholder funds 10% Debenture (2030) Required: Ye-Dec-20 Ye-Dec-19 18,500 16,000 4,500 4,000 1,500 2,400 3,000 1,600 1,100 700 1,900 900 19,600 16,400 840 640 2,790 1,890 450 350 830 570 340 460 2,910 1,850 15,510 13,250 7,000 5,000 22,510 18,250 A) Calculate the following accounting ratios for each year-end 1) Return on Capital Employed 2) Profit Margin on Sales 3) Gearing Ratio 4) Interest Cover Ratio 5) Return to Shareholders 6) Quick Asset or Acid test Ratio 7) Cash Conversion Period (Operating Cash Cycle) B) Outline the limitations of accounting ratios
Data extracts from Gamma's accounts are shown below Turnover Gross Profit Expenses Operating Profit Interest and Tax Profit for Year Non-current assets Inventory Receivables Cash at Bank Payables Other Current Liabilities Net current assets Shareholder funds 10% Debenture (2030) Required: Ye-Dec-20 Ye-Dec-19 18,500 16,000 4,500 4,000 1,500 2,400 3,000 1,600 1,100 700 1,900 900 19,600 16,400 840 640 2,790 1,890 450 350 830 570 340 460 2,910 1,850 15,510 13,250 7,000 5,000 22,510 18,250 A) Calculate the following accounting ratios for each year-end 1) Return on Capital Employed 2) Profit Margin on Sales 3) Gearing Ratio 4) Interest Cover Ratio 5) Return to Shareholders 6) Quick Asset or Acid test Ratio 7) Cash Conversion Period (Operating Cash Cycle) B) Outline the limitations of accounting ratios
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Transcribed Image Text:Data extracts from Gamma's accounts are shown below
Turnover
Gross Profit
Expenses
Operating Profit
Interest and Tax
Profit for Year
Non-current assets
Inventory
Receivables
Cash at Bank
Payables
Other Current Liabilities
Net current assets
Shareholder funds
10% Debenture (2030)
Required:
Ye-Dec-20
Ye-Dec-19
18,500
16,000
4,500
4,000
1,500
2,400
3,000
1,600
1,100
700
1,900
900
19,600
16,400
840
640
2,790
1,890
450
350
830
570
340
460
2,910
1,850
15,510
13,250
7,000
5,000
22,510
18,250
A) Calculate the following accounting ratios for each year-end
1) Return on Capital Employed
2) Profit Margin on Sales
3) Gearing Ratio
4) Interest Cover Ratio
5) Return to Shareholders
6) Quick Asset or Acid test Ratio
7) Cash Conversion Period (Operating Cash Cycle)
B) Outline the limitations of accounting ratios
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