Exam 12: Financial Statement Analysis and Decision Making

For each of the ratios listed , select the appropriate code letter, whether it is a liquidity ratio, a profitability ratio or a solvency ratio: -Debt to total assets ratio

Selected information from the comparative financial statements of Dryman Ltd for the year ended 31 December appears below: Required: Answer the following questions relating to the year ended 31 December 2020. Show computations. 1. Inventory turnover for 2020 is __________. 2. The number of times interest earned ratio in 2020 is __________. 3. The debt to total assets ratio for 2020 is __________. 4. Receivables turnover for 2020 is __________. 5. Return on assets for 2020 is __________. 6. The cash return on sales ratio for 2020 is __________. 7. Current cash debt coverage for 2020 is __________.

For each of the ratios listed , select the appropriate code letter, whether it is a liquidity ratio, a profitability ratio or a solvency ratio: -Acid-test ratio (Quick ratio)

For each of the ratios listed , select the appropriate code letter, whether it is a liquidity ratio, a profitability ratio or a solvency ratio: -Inventory turnover

The following information was taken from the financial statements of Genesis Ltd: Required: (a) Compute the net sales for each year. (b) Compute the cost of sales in dollars and as a percentage of net sales for each year. (c) Compute operating expenses in dollars and as a percentage of net sales for each year. (Income taxes are not operating expenses).

Communication: Fast Express specialises in the transportation of medical equipment and laboratory specimens overnight. The company has selected the following information from its most recent annual report to be the subject of an immediate press release. • The financial statements are being released. • Profit this year was $2.1 million. Last year's profit had been $1.8 million. • The current ratio has changed to 2:1 from last year's 1.5:1. • The debt/total assets ratio has changed to 4:5 from last year's 3:5. • The company expanded its truck fleet substantially by purchasing ten new delivery vans. • The company already had twelve delivery vans. The company is now the largest medical courier on the Eastern seaboard. Required: Prepare a brief press release incorporating the information above. Include all information. Think carefully which information (if any) is good news for the company, and which (if any) is bad news.

Selected data for Marcy's Apparel appear below. Compute the following for 2020: (a) Gross profit percentage (b) Inventory turnover (c) Receivables turnover

Return on ordinary shareholders' equity is driven by:

In a traditional set of financial statements, the values of items found in a statement of financial position will be:

The comparative statement of financial position of Grange Wine Ltd appears below: Instructions: (a) Using horizontal analysis, show the percentage change for each statement of financial position item using 2019 as a base year. (b) Using vertical analysis, prepare a common-size comparative statement of financial position.

Liquidity ratios are used to assess:

Birch Ltd had the following comparative current assets and current liabilities: During 2020, credit sales and cost of sales were $450,000 and $250,000, respectively. Net cash provided by operating activities for 2020 was $134,000. Compute the following liquidity measures for 2020: 1. Current ratio 2. Quick ratio 3. Current cash debt coverage 4. Receivables turnover 5. Inventory turnover