Homework Help is Here – Start Your Trial Now!
Business
Accounting
tequired: n the table below, calculate Net Profit Margin, Asset Turnover, Financial Leverage, and Return quity (ROE) ratios for the two businesses. Peanut Queen Lord of Ice Net Profit Margin Asset Turnover Financial Leverage ROE

tequired: n the table below, calculate Net Profit Margin, Asset Turnover, Financial Leverage, and Return quity (ROE) ratios for the two businesses. Peanut Queen Lord of Ice Net Profit Margin Asset Turnover Financial Leverage ROE

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
Peanut Queen and Lord of ice are two competitors selling ice-cream. Below is the information pertaining to the two businesses for the financial year ended June 30, 2021. Peanut Queen Lord of Ice Net Profit ($) 105,000 280,000 Cost of Goods Sold ($) Total Assets ($) 100,000 1,000,000 500,000 800,000 Total Liabilities 250,000 300,000 Gross Profit ($) 110,000 600,000 Lisa has capital to invest in one of the businesses. She likes peanut butter ice-cream but needs to consider the financial performance of the two businesses to make an informed investment decision. Required: In the table below, calculate Net Profit Margin, Asset Turnover, Financial Leverage, and Return on Equity (ROE) ratios for the two businesses. Peanut Queen Lord of Ice Net Profit Margin Asset Turnover Financial Leverage ROE Based on the financial performance alone, which one of the two businesses would you recommend to Lisa to invest in? Considering the components of the DuPont model, which component is driving the financial performance of the business you chose? Answer here: Provide one example of non-financial information Lisa could consider in addition to the ratios calculated above when choosing between the two businesses. Briefly explain how that example of non-financial information could assist Lisa in her decision-making process. Answer here:
Transcribed Image Text:Peanut Queen and Lord of ice are two competitors selling ice-cream. Below is the information pertaining to the two businesses for the financial year ended June 30, 2021. Peanut Queen Lord of Ice Net Profit ($) 105,000 280,000 Cost of Goods Sold ($) Total Assets ($) 100,000 1,000,000 500,000 800,000 Total Liabilities 250,000 300,000 Gross Profit ($) 110,000 600,000 Lisa has capital to invest in one of the businesses. She likes peanut butter ice-cream but needs to consider the financial performance of the two businesses to make an informed investment decision. Required: In the table below, calculate Net Profit Margin, Asset Turnover, Financial Leverage, and Return on Equity (ROE) ratios for the two businesses. Peanut Queen Lord of Ice Net Profit Margin Asset Turnover Financial Leverage ROE Based on the financial performance alone, which one of the two businesses would you recommend to Lisa to invest in? Considering the components of the DuPont model, which component is driving the financial performance of the business you chose? Answer here: Provide one example of non-financial information Lisa could consider in addition to the ratios calculated above when choosing between the two businesses. Briefly explain how that example of non-financial information could assist Lisa in her decision-making process. Answer here:
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Ratio Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS