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Return on capital employed Acid test ratio iv. V. vi. Current ratio vii. Times interest earned ratio Analyse the firm's performance using the industry norms/aw outlined above. The analysis should be based on: i. Profitability

Return on capital employed Acid test ratio iv. V. vi. Current ratio vii. Times interest earned ratio Analyse the firm's performance using the industry norms/aw outlined above. The analysis should be based on: i. Profitability

FINANCIAL ACCOUNTING
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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KINDLY ANSWER PARTS IV & V FOLLOWED BY PART B.i,ii,iii

A Question 1 A condensed balance sheet and other financial data for the Nike Company are provided below. Nike Company Balance Sheet as at December 31, 20X1 ASSETS Current assets Plant assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Long-term liabilities. Total liabilities Common Stock $1 par value Retained Earnings. Total liabilities and stockholders' equity Net sales Interest expense Net income NB: Inventory at 31 December 20X1 is $30 000 Income statement data for the year ended 31 December 20X1 are recorded below: $375,000 6,000 30,500 Current Ratio Times interest earned $110,000 140,000 $250,000 6.5% 36% 0.85:1 102:1 4 times $100,000 65,000 $165,000 Additional information as at 31 December 20X0 is shown below: Total assets Stockholders' equity The tax rate is 30 percent. Industry norms/averages for the same ratios as of December 31, 20X1, are: Debt to equity ratio 10 ono11 75 Earnings per share $0,26 Return on total assets Return on stockholders' equity Acid test ratio alisieren 70,000 15,000 $250,000 $200,000 $65,000 L
Transcribed Image Text:A Question 1 A condensed balance sheet and other financial data for the Nike Company are provided below. Nike Company Balance Sheet as at December 31, 20X1 ASSETS Current assets Plant assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Long-term liabilities. Total liabilities Common Stock $1 par value Retained Earnings. Total liabilities and stockholders' equity Net sales Interest expense Net income NB: Inventory at 31 December 20X1 is $30 000 Income statement data for the year ended 31 December 20X1 are recorded below: $375,000 6,000 30,500 Current Ratio Times interest earned $110,000 140,000 $250,000 6.5% 36% 0.85:1 102:1 4 times $100,000 65,000 $165,000 Additional information as at 31 December 20X0 is shown below: Total assets Stockholders' equity The tax rate is 30 percent. Industry norms/averages for the same ratios as of December 31, 20X1, are: Debt to equity ratio 10 ono11 75 Earnings per share $0,26 Return on total assets Return on stockholders' equity Acid test ratio alisieren 70,000 15,000 $250,000 $200,000 $65,000 L
Required: a. From the information above calculate for 31 December 20X1 the following ratios: i. Debt to Equity ratio ii. Earnings per share Return on total assets Return on capital employed Acid test ratio. iii. iv. V. vi. vii. b. Analyse the firm's performance using the industry norms/averages outlined above. The analysis should be based on: i. Profitability ii. iii. Question 2 Current ratio Times interest earned ratio i. ii. iii. Liquidity and Debt Management The following are some terms used in financial management Time value of money Agency Theory Working capital management Required a) Briefly explain each term outlined above b) Differentiate between a risky asset and a risk free asset. c) Briefly explain three limitations of ratio analysis. End of Project work within a group of 5 persons 53 ده ست
Transcribed Image Text:Required: a. From the information above calculate for 31 December 20X1 the following ratios: i. Debt to Equity ratio ii. Earnings per share Return on total assets Return on capital employed Acid test ratio. iii. iv. V. vi. vii. b. Analyse the firm's performance using the industry norms/averages outlined above. The analysis should be based on: i. Profitability ii. iii. Question 2 Current ratio Times interest earned ratio i. ii. iii. Liquidity and Debt Management The following are some terms used in financial management Time value of money Agency Theory Working capital management Required a) Briefly explain each term outlined above b) Differentiate between a risky asset and a risk free asset. c) Briefly explain three limitations of ratio analysis. End of Project work within a group of 5 persons 53 ده ست
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