Course: Strategic Management

Question:

A. Refer to XYZ Financial Statements enclosed. You are required to calculate: Debt to asset ratio, Inventory turnover ratio and Gross profit margin

B. In addition, you are to explain what each ratio means and whether each signifies a positive or negative position for the entity (20 marks)

XYZ Corporation Income Statement Revenue \begin{tabular}{|r|r|} \hline 2020 \\ \hline 21,200,000 \\ \hline 6,500,000 \\ \hline 80,000 \\ \hline & 14,620,000 \\ \hline \end{tabular} Expenses Advertising Bad debt Depreciation Wages and benefits Insurance Bank Interest Maintenance and repairs Office supplies Rent Utilities Other Total Expenses \begin{tabular}{|r|r|} \hline & 52,000 \\ \hline & 150,000 \\ \hline 500,000 \\ \hline 2,400,000 \\ \hline 120,000 \\ \hline 15,000 \\ \hline 890,000 \\ \hline 750,000 \\ \hline 1,500,000 \\ \hline 650,000 \\ \hline & 473,000 \\ \hline 7,500,000 \\ \hline \end{tabular} Net Profit Corporation Tax (25\%) Net Income \begin{tabular}{rr} 7,120,000 \\ \hline 1,780,000 \\ \hline 5,340,000 \\ \hline \end{tabular}