Financial Statement Analysis

Togo Co.

Statement of Retained Earnings for the Year

Net income for the year

Dividends

Add: Retained earnings brought forward

Retained earnings carried forward

900.000

300.000

600.000

2,400.000

$ 3,000,000

Required

Use the information in the financial statements to answer the lonowing

questions:

Calculate the following ratios:

return on sales ratio (as a %)

(il) return on assets ratio (as a %)

(111)

return on equity ratio (as a %)

1. Based on these ratios, comment on the profitability of the company.
2. Calculate the following ratios.

(ii) the quick ratio

(d)

Based on these ratios, comment on the liquidity of the companv

(e) Calculate the following ratios:

(1) the gross profit to sales ratio (as a %)

(in) the ratio of operating expenses to sales (as a %)

(111) the operating income to sales ratio (as a %)

(iv)

the net income to sales ratio (as a %)

(v) the interest cover ratio (vi) the dividend cover ratio

Based on these ratios. comment on the profitability of the compan.

(g) Calculate the following.

i The receivables Turnover ratio

the receivables collection period (il the inventor turnover ratio (iv)

the days' sales in inventors

(v)

the total asset turnover ratio

1. Based on these ratios, comment on the efficiency of the company.
2. Assume Togo Co.'s share price is $100 per share, and there are 100,000 shares in issue. Calculate the following: the dividend payout ratio in the earnings per snare

(111) the price to earnings ratio

Based on these ratios. comment on the desirabilty of these shares

as an investment.

Dandy Co. had operating profit of $250,000. The company paid interest at a rate of 5% on $250,000 of debt and paid tax of $95,000. The company also paid a dividend of $100,000. The interest cover ratio was 7.5 none of the options 10x 20X 12.4X