9:51 AM L O16Assignment 1 .pdfC.debt-to-total-assets ratio55%d. debt-to-equity ratio1 times5 times5 times35 dayse.times-interest-earned ratiof. fixed-charges coverage ratiog. average collection periodh. inventory turnover ratioi. capital assets turnover ratioj. total assets turnover ratio6 times2 times1 timesk. profit margin on revenue ratio 6%1. return on revenue ratio (Profit/Revenue)return on total assets ratio3%m.4%return on equity ratio12%n.Statement of Financial PositionAs at December 31, 2013(in S)Non-current assetsEquityProperty, plant, and equipment2.600,000 Preferred shares100,000Accumulated depreciation(700,000) Common shares500,000Total non-current assets1,900,000 Retained earnings560,000Total equity1,160,000Long-term borrowings1,640,000Current assetsCurrent liabilitiesInventories1,100,000 Trade and other payables710,000Trade receivables900,000Notes payable250,000Term deposits120,000Accruals260,000Cash90,000Current income taxes payable90,000Total current assets2,210,000Total current liabilities1,310,000Total assets4,110,000Total equity and liabilities4,110,000Statement of IncomeFor the year ended December 31, 2013(in S)Revenue4,500,000Cost of sales(3,300,000)Gross profit1,200,000Other income20,000ExpensesDistribution costs(350,000)Rent(100,000)Administrative expenses(345,000)(795,000)Finance costs(120,000)Depreciation(50,000)Total other income/costs(945,000)Profit before taxes255,000Income tax expense(127,500)Profit for the year1 27,500 9:50 AM L O16Assignment 1 .pdfCASE 1: PICKWICK RESTAURANTSJaclyn Hargrove is the owner of six Pickwick Restaurants. For the past 10 years, shehas always relied on her accountant to analyze her financial statements. Jaclyn feelsthat if she were able to understand her financial statements, she would be able toimprove her financial performance. More importantly, she would be able to makebetter decisions that touch on all aspects of her business, from the management ofworking capital to making investments.Jaclyn has just purchased accounting software that can provide her with monthly,quarterly, and yearly financial statements and, more importantly, all types of ratios thatwould help her improve her analysis and decisions.Jaclyn asks you for some advice in understand the meaning of her financial state-ments. She shows you her December 31, 2013, statement of financial position andstatement of income and asks you to calculate and explain the meaning of the moreimportant financial ratios.To help Jaclyn understand financial ratios, calculate the financial ratios by using the2013 statement of financial position and statement of income, and explain to her themeaning and significance of each ratio:,"External Ratios (Benchmark)current ratio1.5 times1 timesb. quick ratioc. debt-to-total-assets ratiod. debt-to-equity ratio55%1 timese. times-interest-earned ratiof. fixed-charges coverage ratiog. average collection periodh.5 times5 times35 daysinventory turnover ratioi. capital assets turnover ratio6 times2 timesj. total assets turnover ratio1 timesk. profit margin on revenue ratio 6%1. return on revenue ratio (Profit/Revenue) 3%m.return on total assets ratio4%n.return on equity ratio12%Statement of Financial PositionAs at December 31, 2013(in S)Non-current assetsEquity2,600,000 Preferred shares100,000Property, plant, and equipmentAccumulated depreciation(700,000) Common shares500,000Total non-current assets1,900,000 Retained earnings560,000Total equity1,160,000

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9:51 AM O 16 Assignment 1 .pdf •.. debt-to-total-assets ratio 55% C. d. debt-to-equity ratio 1 times times-interest-earned ratio f. fixed-charges coverage ratio g. average collection period h. inventory turnover ratio i. capital assets turnover ratio i. total assets turnover ratio 5 times 5 times 35 days e. 6 times 2 times 1 times k. profit margin on revenue ratio 6% 1. return on revenue ratio (Profit/Revenue) 3% return on total assets ratio 4% m. n. return on equity ratio 12% Statement of Financial Position As at December 31, 2013 (in S) Non-current assets Equity 100,000 Property, plant, and equipment Accumulated depreciation 2,600,000 Preferred shares (700,000) Common shares 500,000 Total non-current assets 1,900,000 Retained earnings 560,000 Total equity 1,160,000 Long-term borrowings 1,640,000 Current assets Current liabilities Trade and other payables Notes payable Inventories 1,100,000 710,000 Trade receivables 900,000 250,000 Term deposits 120,000 Accruals 260,000 Cash 90,000 Current income taxes payable 90,000 Total current assets 2,210,000 Total current liabilities 1,310,000 Total assets 4,110,000 Total equity and liabilities 4,110,000 Statement of Income For the year ended December 31, 2013 (in S) Revenue 4,500,000 Cost of sales (3,300,000) Gross profit 1,200,000 Other income 20,000 Expenses Distribution costs (350,000) Rent (100,000) Administrative expenses (345,000) (795,000) Finance costs (120,000) Depreciation (50,000) Total other income/costs (945,000) Profit before taxes 255,000 Income tax expense (127,500) Profit for the year 1 27,500

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