Use the information provided from Sapphire Ltd calculate and comment on the following ratios:1. Profit margin2. Return on equity Excerpts of the financial data of Sapphire Ltd for 2022 are as follows:STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022RSalesCost of salesOperating profitInterest expenseProfit before taxCompany taxSTATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022AssetsNon-current assetsInventoriesAccounts receivableCashEquity and liabilitiesOrdinary share capital (704 000 shares)Retained earningsLong-term loan (12% p.a.)Accounts payableDividends payable (for 2022)7 800 0005 280 000796 800105 600691 200207 360R2 352 0003 120 000931 2009 6006 412 8001 689 6001 382 400888 0002 092 800360 0006 412 8001.2.Additional informationAll purchases and sales of inventories were on credit.Inventories on 31 December 2021 amounted to R2 880 000.3.The following ratios were calculated for 2022 and 2021:20222021Profit margin6.20%13.63%Return on equity15.75%21.85%4.The market prices of the company's shares for 2022 and 2021 were R4.00 and R3.50 respectively.

Based on the financial data provided for Sapphire Ltd for the year 2022, we can analyze and…

Answered: Excerpts of the financial data of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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5. Know the calculations for all of the following ratios (see ratio sheet that can be used on the exam) and know the category (listed in Question 4) they fall in: Formula Category/Use Ratio Working Capital Current Assets - Current Liabilities Net credit sales/Average Accounts Receivable Turnover accounts receivable Asset Turnover Net sales/Average total assets Net income/Average total stockholders' equity Total liabilities/Total stockholders equity Net income/Net sales Return on Equity (ROE) Debt to equity Return on Sales (ROS) (also known as Net Margin Current Assets/Current Liabilities Cost of goods sold/Average inventory Quick assets/Current Current Ratio Inventory Turnover Quick Ratio liabilities Dividend Yield Dividends per share/Market price per share Net earnings available for common stock/Number of outstanding common shares Net income/Average total Earnings per Share (EPS) Return on Investment (ROI) assets Price Earnings Ratio (P/E) Market price per share/Earnings per share…
Analyze and interpret the financial statement presented in terms of profitability ratios. A. Gross profit, operating and net income ratios See the second image as guide.
Assess the relative profitability of the company (as benchmarked with competitors) using the following ratios: gross profit margin net profit margin return on assets return on equity
Answer Using the Pictures 4) Evaluate the information from (i) two liquidity ratios (ii) four debt management ratios (iii) four profitability ratios
Liquidity Ratio Current Ratio Quick Ratio Leverage Ratio Debt to Total Assets Ratio Debt Equity Ratio Long-Term Debt to Equity Times Interest Earned Ratio Activity Ratios Inventory Turnover Fixed Assets Turnover Total Assets Turnover Accounts Receivable Turnover Average Collection Period Profitability Ratios Gross Profit Margin Operating Profit Margin Net Profit Margin Return on Total Assets (ROA) Return on Stockholder's Equity (ROE) Earnings Per Share (EPS) Price Earnings Ratio Please provide the numbers for the ratios.
Definitional problems: Listed are 11 terms that relate to ratio analysis:1. Book value per share2.Inventoryturnover3. Debt-to-equity ratio4. Average collection period5. Average sales period6. Return on common equity7. Earnings per share8. Price/earnings ratio9. Return on total assets10. Current ratio11. Accounts-receivable turnoverChoose the financial ratio or term from the list that most appropriately completes each of the following statements:1. The__________ tends to have an effect on the market price per share asreflected in the price/earnings ratio.2. The__________ indicates whether a stock is relatively cheap or relativelyexpensive in relation to current earnings. 3. The________ measures the amount that would be distributed to holders of common stock if all assets were sold at their balance-sheet carrying amount and if all creditors were paid off.4. The_____________ is a rough measure of how many times a company'saccounts…
Based on financial reports prepare ratio analysis and interpret the result of the Following ratios: B) Leverage : Debt to Total Assets Ratio, Debt to Equity Ratio
Which of the ratios listed helps to indicate whether current liabilities could be paid without having to sell the inventory? a.Current ratio b.Profit margin c.Quick ratio d.Debt to equity
Comparative Income Statement Use the following comparative income statement form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part and on the Profitability Measures part. Compute any missing amounts and complete the horizontal analysis columns. Enter percentages as decimal amounts, rounded to one decimal place. When rounding, look only at the figure to the right of one decimal place. If 5, round up. For example, for 32.048% enter 32.0%. For 32.058% enter 32.1%. Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Operating income Other expense (interest) Income before income tax expense Income tax expense Net income Comparative Income Statement For the Years Ended December 31, 20Y6 and 20Y5 $ 20Y6 8,250,000 X (1,242,000) 20Y5 $7,287,000 (3,444,000) $3,843,000 $(1,457,600) (1,106,000) $(2,563,600) $1,279,400 (120,600) $1,158,800 (181,980) $976,820 $ $ $ Increase/(Decrease) Amount 823,000 X…
ratio of net income to equity is also known as: Total net equity ratio Profit margin Return on equity Net income ratio None of these are correct.
determine the following ratios for both companies, then based on the information analvze and compare the two companies' solvency and profitability. Ratios: Return on total assets Return on stockholders' equity Times interest earned Ratio of total liabilities to stockholders' equity.
Interpret the results: • Return on equity • Return on assets • Gross profit margin • Operating profit margin • Net profit margin

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