Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

if possible completed in an hour, i need help please reply quickly E8.16 Warne Enterprises decides to expand its operations by applying for an additional

if possible completed in an hour, i need help please reply quickly

image text in transcribed E8.16 Warne Enterprises decides to expand its operations by applying for an additional loan of $600 000. As a result, revenue from ordinary activities is expected to increase by $30 000. Financial data (assume average balances) before and after expansion include: Before expansion Total assets (average) Total liabilities Average shareholders' equity Revenue from ordinary activities Interest expense Profit before income tax Income tax expenses (30 per cent) Profit After expansion $3 000 000 $3 600 000 800 000 2 200 000 800 000 60 000 740 000 222 000 $518 000 1 400 000 2 100 000 830 000 80 000 750 000 225 000 525 000 Required Calculate the following: Before a ROA ratio b Return on ordinary shareholders' ratio After Would shareholders be happy with the expansion plans? E8.19 Examine what happens to the gross profit margin when: a. advertising is incurred. b. selling prices are increased assuming customers buy the same amount. c. suppliers increase their prices. E8.24 Zhang Company's financial records reveal the following at 30 June 2016. Net sales $225 000 Cost of sales $94 000 Ending inventory $37 000 Beginning inventory a. $22 000 Assuming a 365-day year, calculate the days inventory ratio. Interpret and explain this ratio. b. Zhang Company proposes to improve control of inventory and to reduce days inventory levels by five days. If this is achieved, calculate how many times inventory would be turned over per annum. Estimate by how much the average inventory would need to be reduced. E8.25 (b & c) Rejected Ltd reports the following information: $'000 Total assets Profit after tax 1 920 65 Current liabilities 570 Non-current liabilities 830 $'000 Interest revenue 110 Interest expense 160 Tax expense 45 Current assets = 50% of total assets From this information, calculate and interpret the following ratios (year-end figures will have to be used because the comparative year figures are not available) and prepare a report on the financial position and performance of Rejected Ltd: b. return on equity c. return on assets using: i. profit ii. iii. EBIT

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Robert Libby, Patricia A Libby

7th Edition

0078111021, 9780078111020

More Books

Students also viewed these Accounting questions

Question

What are the purposes of promotion ?

Answered: 1 week ago