Below is the budget information for Reid Limited. Beginning cash balance on June 1: $25,000 Cash receipts from sales: 50% are collected in the month of sale, 50% in the next month. The following amounts are actual and budgeted sales: April $800,000 o May $600,000 June $700,000 Payments on purchases: 60% in the month of purchase and 40% in the month following purchase. The following amounts are actual and budgeted merchandise purchases: - May $215,000 June $300,000 Budgeted cash disbursements for salaries in June: $105,000 Budgeted depreciation expense on long-lived assets for June: $6,000 . Other cash expenses budgeted for June: $75,000 Bank loan interest due in June: $3,300 Dernirodi ncyuncu. 1. Which company is more liquid? Explain. (3 marks) 2. Which company is more profitable? Explain. (3 marks) 3. Which company is more solvent? Explain. (3 marks) 4. Which company do investors favour? Explain. (3 marks) Ratio Asset Turnover Current Ratio Debt to Total Assets Earnings Per Share Gross Profit Margin Interest Coverage Inventory Turnover Price-Earnings Profit margin Receivables Turnover Return on Assets Return on Shareholder's Equity ALPHA CORP. BETA CORP INDUSTRY 1.0 times 1.0 times 0.9 times 1.1: 1.0 0.6: 1. 0 0.8 : 1.0 72% 56% 62% $0.98 $1.37 $1.08 60.00% 73.80% 57.70% 7.9 times 15.3 times 53.3 times 9.9 times 5.8 times 8.3 times 24.3 times 50.3 times 32.2 times 11.20% 12.30% 8.10% 11.4 times 9.8 times 9.3 times 9.30% 11.20% 7.20% 39.80% 25.70% 26.40% Refer to the formula sheet in the document "Approved Reference Exam" provided. Below is the budget information for Reid Limited. Beginning cash balance on June 1: $25,000 Cash receipts from sales: 50% are collected in the month of sale, 50% in the next month. The following amounts are actual and budgeted sales: April $800,000 o May $600,000 June $700,000 Payments on purchases: 60% in the month of purchase and 40% in the month following purchase. The following amounts are actual and budgeted merchandise purchases: - May $215,000 June $300,000 Budgeted cash disbursements for salaries in June: $105,000 Budgeted depreciation expense on long-lived assets for June: $6,000 . Other cash expenses budgeted for June: $75,000 Bank loan interest due in June: $3,300 Dernirodi ncyuncu. 1. Which company is more liquid? Explain. (3 marks) 2. Which company is more profitable? Explain. (3 marks) 3. Which company is more solvent? Explain. (3 marks) 4. Which company do investors favour? Explain. (3 marks) Ratio Asset Turnover Current Ratio Debt to Total Assets Earnings Per Share Gross Profit Margin Interest Coverage Inventory Turnover Price-Earnings Profit margin Receivables Turnover Return on Assets Return on Shareholder's Equity ALPHA CORP. BETA CORP INDUSTRY 1.0 times 1.0 times 0.9 times 1.1: 1.0 0.6: 1. 0 0.8 : 1.0 72% 56% 62% $0.98 $1.37 $1.08 60.00% 73.80% 57.70% 7.9 times 15.3 times 53.3 times 9.9 times 5.8 times 8.3 times 24.3 times 50.3 times 32.2 times 11.20% 12.30% 8.10% 11.4 times 9.8 times 9.3 times 9.30% 11.20% 7.20% 39.80% 25.70% 26.40% Refer to the formula sheet in the document "Approved Reference Exam" provided
