Question
Morning star plc. is a manufacturer of computer accessories. The following are selected items appearing in the income statement and balance sheet for the year
Morning star plc. is a manufacturer of computer accessories. The following are selected items appearing in the income statement and balance sheet for the year ended December 31st, 2015.
Income Statement | |
Net Sales | 1,620,000 |
Less: Cost of Goods Sold | 1,110,000 |
Gross Profit | 510,000 |
Selling and general expenses | 360,000 |
Net Operating profit | 150,000 |
Interest expenses | 24,000 |
Net Profit before ta | 126,000 |
Income tax 35% | 44,100 |
Net profit for the year | 81,900 |
Balance Sheet | |
Cash and short term investments | 45,000 |
Receivables | 135,000 |
Inventories | 96,000 |
Property, plant & Equipment | 348,000 |
Total Assets | 624,000 |
Total current liabilities | 126,000 |
Total Non-current liabilities | 156,000 |
Shareholders Equity | 237,000 |
Retained Earnings | 105,000 |
Total Liabilities and Equity | 624,000 |
Required:
Using the information above, compute the Companys ratio below and comment on each:
- Acid-test ratio b. Current ratio
- Asset Turnover d. Interest Cover
- Gearing ratio f. Debt ratio
- Return on capital employed h. Gross profit margin
- Net profit margin j. Operating profit Margin
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