QUESTION 11 Apple Ltd and Beans Ltd have been competitors in the tomato industry for the past ten years. The following financial statements relate to the three years ended 31st December 2007, 2008 and 2009 Apple Ltd Beans Ltd Gross profit margin (%) Return on capital surplus (%) Profit margin (%) Asset turnover (times) Gearing (%) Debt/Equity (%) Interest cover (times) Current ratio Quick ratio Receivables collection period (days) Payables payment period (days) Inventory turnover (times) 2007 2008 2009 28.9 26.5 27.6 23.2 18.515.7 4.55.5 5.8 1.5 1.61.7 20.5 24.6 26.5 22.5 25.6 29.8 6.1 6.5 7.2 2007 2008 2009 31.2 33.8 34.8 22.5 24.6 28.0 7.7 11.8 14.8 1.791.91 2.03 19.925.3 24.7 24.8 33.9 32.8 12.6 8.5 9.2 2.98:1 3.11 3.2:1 1.35:1 1.27: 1.23:1 42.3 36.3 39.1 34.4 33.0 34.9 112.3127.5 131.9 1.2:1 0.9:1 0.61 52 5453 27 24 23 80.6 78.5 82.6 Required: a) Comment and compare the performances of Apple Ltd and Beans Ltd using the ratios provided. (15 marks) b)State any three reasons why a company should be interested in the performance of its competitors.(3 marks) c) Explain the problems that are inherent when ratios are used to assess a company's financial performance. (2 marks) QUESTION 8 a) Explain the fundamental qualitative characteristics of accounting information. (5 Marks) b) Explain the enhancing qualitative characteristics of accounting information. (5 Marks) c) Financial statements are the summary of the financial results of the operation of a business for a specified period of time and the financial position as at that date. What are the components of financial statements? (2.5 marks) d) Financial statements are prepared to meet the demands and aspirations of certain group of people Mention five (5) users of financial satements and state any two reasons why such user needs financial statements. (2.5 marks) e) DuPont is said to be the better way of analyzing Return On Equity (ROE). What are the components of DuPont Analysis? (3 marks) QUESTION 11 Apple Ltd and Beans Ltd have been competitors in the tomato industry for the past ten years. The following financial statements relate to the three years ended 31st December 2007, 2008 and 2009 Apple Ltd Beans Ltd Gross profit margin (%) Return on capital surplus (%) Profit margin (%) Asset turnover (times) Gearing (%) Debt/Equity (%) Interest cover (times) Current ratio Quick ratio Receivables collection period (days) Payables payment period (days) Inventory turnover (times) 2007 2008 2009 28.9 26.5 27.6 23.2 18.515.7 4.55.5 5.8 1.5 1.61.7 20.5 24.6 26.5 22.5 25.6 29.8 6.1 6.5 7.2 2007 2008 2009 31.2 33.8 34.8 22.5 24.6 28.0 7.7 11.8 14.8 1.791.91 2.03 19.925.3 24.7 24.8 33.9 32.8 12.6 8.5 9.2 2.98:1 3.11 3.2:1 1.35:1 1.27: 1.23:1 42.3 36.3 39.1 34.4 33.0 34.9 112.3127.5 131.9 1.2:1 0.9:1 0.61 52 5453 27 24 23 80.6 78.5 82.6 Required: a) Comment and compare the performances of Apple Ltd and Beans Ltd using the ratios provided. (15 marks) b)State any three reasons why a company should be interested in the performance of its competitors.(3 marks) c) Explain the problems that are inherent when ratios are used to assess a company's financial performance. (2 marks) QUESTION 8 a) Explain the fundamental qualitative characteristics of accounting information. (5 Marks) b) Explain the enhancing qualitative characteristics of accounting information. (5 Marks) c) Financial statements are the summary of the financial results of the operation of a business for a specified period of time and the financial position as at that date. What are the components of financial statements? (2.5 marks) d) Financial statements are prepared to meet the demands and aspirations of certain group of people Mention five (5) users of financial satements and state any two reasons why such user needs financial statements. (2.5 marks) e) DuPont is said to be the better way of analyzing Return On Equity (ROE). What are the components of DuPont Analysis