Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Kindly work out the problem fully QUESTION 1 (CPANov., 2004) (a) Trends in accounting ratios may provide more useful insight into an entity's financial performance
Kindly work out the problem fully
QUESTION 1 (CPANov., 2004) (a) Trends in accounting ratios may provide more useful insight into an entity's financial performance and position than the latest financial statements. 1RatioQuestions Apt Financial Consultants CPA Reviews REQUIRED Comment on this statement. (5 marks) (b) Kalikamo Limited car ries on business as a manufacturer of tractors. In 2004 the company was looking for acquisitions and carried out investigations into a number of possibletargets. One of these was a competitor, Modern Tractors Ltd. The company's acquisition strategy was to acquire companies that were vulnerable to a takeover and in which therewas an opportunity to improve asset management and profitability. The Chief Account ant of Kalikamo Limited has instructed his assistant to calculate ratios from the financial statements of Modern Tractors Limited for the past threeyears and to prepare a report based on these ratios and the industry average ratios that have been provided by the Chamber of Commerce. The ratios prepared by the Assistant Accountant for Modern Tractors Limited and the industry averages for 2004 are set out below:- Ratio Questions Note: Total assets = Fixed assets at net book value + Current assets Net fixed assets = Fixed assets at net book value . REQUIRED: Assuming the role of the Chief Accountant, draft a brief report to be submitted to the Managing Director based on theratios of Modern Tractors Ltd. for 2002 to 2004 and the industry averages for 2004. (15 marks) (Total=20marks)Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started