5. Interpreting Financial Statistics Given below are the financial statistics relating to Datts PTY Co. Ltd. Study the information given below and answer the questions that follow. Financial Highlights Rate of inventory turnover Return on total assets percentage Quick asset Debtors turnover Gross profit percentage 2008 2 times 60% 1.10: 1.00 30 days 45% 2009 3 times 40% 0.60: 1.00 52 days 30% a) The return on total assets percentages had declined to 40% in 2009. What conclusion can be drawn this trend? b) Give one possible reason for the decrease in the gross profit ratio. c) Debtors' turnover has increased from 30 to 52 days. List two measured that the business can take to recover overdue accounts. d) Briefly comment on the firm's quick asset ratio. e) Give a possible reason for the slight improvement in the inventory turnover. f) List two features of a good accounting report.

5. Interpreting Financial Statistics Given below are the financial statistics relating to Datts PTY Co. Ltd. Study the information given below and answer the questions that follow. Financial Highlights Rate of inventory turnover Return on total assets percentage Quick asset Debtors turnover Gross profit percentage 2008 2 times 60% 1.10: 1.00 30 days 45% 2009 3 times 40% 0.60: 1.00 52 days 30% a) The return on total assets percentages had declined to 40% in 2009. What conclusion can be drawn this trend? b) Give one possible reason for the decrease in the gross profit ratio. c) Debtors' turnover has increased from 30 to 52 days. List two measured that the business can take to recover overdue accounts. d) Briefly comment on the firm's quick asset ratio. e) Give a possible reason for the slight improvement in the inventory turnover. f) List two features of a good accounting report.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 3P

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Question

5.
Interpreting Financial Statistics
Given below are the financial statistics relating to Datts PTY Co. Ltd. Study the
information given below and answer the questions that follow.
Financial Highlights
Rate of inventory turnover
Return on total assets
percentage
Quick asset
Debtors turnover
Gross profit percentage
2008
2 times
60%
1.10: 1.00
30 days
45%
2009
3 times
40%
0.60: 1.00
52 days
30%
a) The return on total assets percentages had declined to 40% in 2009. What
conclusion can be drawn this trend?
b) Give one possible reason for the decrease in the gross profit ratio.
c) Debtors' turnover has increased from 30 to 52 days. List two measured
that the business can take to recover overdue accounts.
d) Briefly comment on the firm's quick asset ratio.
e) Give a possible reason for the slight improvement in the inventory
turnover.
f) List two features of a good accounting report.

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