Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Profitability ratios: (3 marks) PSA12.1 Here are comparative statement data for Spencer Ltd and Forrester Ltd, two competitors. All data relating to the statement of

image text in transcribed

Profitability ratios: (3 marks) PSA12.1 Here are comparative statement data for Spencer Ltd and Forrester Ltd, two competitors. All data relating to the statement of financial position are as at 30 June, the end of the reporting period for both entities. Profitability Spencer Ltd Forrester Ltd SPENCER LTD 2016 2015 FORRESTER LTD 2016 2015 Profit Margin Return on assets Asset turnover Net sales $ 1 250 000 $ 410 000 Cost of sales 690 000 257 000 Operating expenses 321 000 62 000 Finance costs 6 000 1 200 Income tax expense 69 900 26 940 Profit 163 100 62 860 Current assets 325 975 $ 312 410 188 000 $ 180 000 Non-current assets 521 310 500 000 240 000 216 000 Current liabilities 79 595 75 815 36 000 32 000 Non-current liabilities 108 500 90 000 27 000 24 000 Share capital, $10 each 500 000 500 000 320 000 300 000 Retained earnings 159 190 146 595 45 000 40 000 Required Comment on the relative profitability of the entities (2 comments) by calculating the profit margin, return on assets and the asset turnover for both entities. Comments: (2 marks)

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

Step: 3

blur-text-image

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

Introduction To Management Accounting With Myaccountinglab And

Authors: Alnoor Bhimani, Charles T. Horngren, Gary L. Sundem, William O. Stratton, Jeff Schatzberg, Dave Burgstahler

1st Edition

1292178116, 978-1292178110

More Books

Students also viewed these Accounting questions

Question

What is noise?

Answered: 1 week ago