Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 12

Preparing and Interpreting IFRS Financial Statements
H M is a retail clothing company headquartered in Sweden with operations in 38 countries, including 208 stores in the United States. The company began its 2010 fiscal year with assets totaling 54,363 (in millions of Swedish krona) but ended the year (on November 30, 2010) with 59,182 in total assets. Account balances on November 30, 2010, are listed below (in millions of Swedish krona).

Required:
1. Prepare a statement of financial position at November 30, 2010, using Exhibit 5.12 as a guide.
TIP: Not all of the accounts listed are reported on the Statement of Financial Position.
2. Use an appropriate ratio to compute H M's financing risk. Compare H M's ratio to the 0.158 reported for Volcom (a clothing company headquartered in California) on December 31, 2010. Which company appears more likely to pay its liabilities
3. Use an appropriate ratio to compute the amount of profit H M earns from each dollar of sales. Compare H M's ratio to that of Volcom, which earned 6.9 cents of profit for each dollar of sales in the year ended December 31, 2010.
4. Use an appropriate ratio to compute H M's efficiency at using assets to generate sales. Compare H M's ratio to the 1.27 reported for Volcom for the year ended December 31, 2010.