Question
Question 1 DMS Pte Ltd Balance Sheet As of 31 Dec 2018 Cash $150,000.00 Accounts Receivables 450,000.00 Inventories 300,000.00 Total Current Assets $900,000.00 Net Fixed
Question 1
DMS Pte Ltd
Balance Sheet
As of 31 Dec 2018
Cash
$150,000.00
Accounts Receivables
450,000.00
Inventories
300,000.00
Total Current Assets
$900,000.00
Net Fixed Assets
1,500,000.00
Total Assets
$2,400,000.00
Accounts Payable
$300,000.00
Long-term Debt
600,000.00
Total Liabilities
900,000.00
Common Stockholders' Equity
1,500,000.00
Total Liabilities and Equity
2,400,000.00
DMS Pte Ltd
Income Statement
As of 31 Dec 2018
Sales
$3,000,000.00
Less: Cost of Goods Sold
1,500,000.00
Gross Profit
$1,500,000.00
Less: Operating Expenses
600,000.00
Operating Profits
$900,000.00
Less: Interest Expenses
90,000.00
Profit Before Taxes
$810,000.00
Less: Taxes (20%)
$162,000.00
Profit After Taxes
$648,000.00
a.Given the industry average figures in the table below, compute the corresponding ratios of DMS Pte Ltd for 2018.
Ratios
Industry Average 2018
DMS Pte Ltd 2018
Current Ratio
2.20
3.00
Quick Ratio
1.50
2.00
Debt Ratio
50.0%
37.5%
Times Interest Earned
8.00
5.00
Gross Profit Margin
50.0%
50.0%
Operating Profit Margin
25.0%
30.0%
Net Profit Margin
12.0%
21.6%
b.Using the information and your answer in part (a), perform a cross-sectional analysis for DMS Pte Ltd in the following areas:
i.Liquidity
ii.Financial Leverage
iii.Profitability
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
Financial and Management Accounting
Authors: Pauline Weetman
7th edition
1292086599, 978-1292086590
