Question

1 Approved Answer

Posted on Jul 15, 2024

QUESTION 3) (25 pts) Using the financial reports of ABC, a) Calculate the followings FOR 2019 ONLY Asset Turnover (2 pts) Equity Multiple (2 pts)

QUESTION 3) (25 pts) Using the financial reports of ABC, a) Calculate the followings FOR 2019 ONLY Asset Turnover (2 pts) Equity Multiple (2 pts) Net Profit Ratio (2 pts) Return on Asset (ROA) (2 pts) Return on Equity (ROE) (2 pts) USE THE BELOW INDUSTRY AVERAGES FOR (b), (c), (d) and (e) parts of Question 3. Industry Industry Industry average average average Net Profit Ratio Asset Turnover Equity Multiple 0.15 2 1.50 b) What is the industry average for ROE in 2019? (2.5 pts) c) What is the industry average for ROA in 2019? (2.5 pts) d) Comparing the company's ROE you found in (a) with the industry average ROE that you found in (b), tell whether company's ROE is favorable or not. If your answer is unfavorable then what would you surBest company management to improve their ROE? (5 pts) e) Comparing the company's ROA you found in (a) with the industry average ROA that you found in (s), tell whether company's ROA is favorable or not. If your answer is unfavorable then what would you sucrest company management to improve their ROA? (5 pts Consolidated Statement of Cash Flows - Year ended 31 December 2019 Kuwaiti Dinars 2019 Note 2018 15,407,798 6,975,653 3,4 1,577,120 28,423 299,302 540,000 61,380 Cash flows from operating activities Profit before contributions and taxes Adjustments for Depreciation Finance costs Foreign exchange loss Provision for post employment benefits Gain on sale and lease back Expected credit loss on Financial Assets Interest on security deposit Provision for KFAS, Zakat & NEST Operating profit before working capital changes Decrease/(increase) in advance for maintenance Increase in inventories Increase in security deposits Increase in trade and other receivables Increase/(decrease) in maintenance payables Increase in trade and other payables Increase in deferred revenue Post-employment benefits paid Cash generated from operations Pald to KFAS, Zakat & NUST Net cash from operating activities Cash flows from investing activities Purchase of property and equipment (net of disposal Sale of Engine tut cash frontured in) vesting activities 12,409,435 2,660,994 223,249 406,376 (1.159,835) 100,969 (61,176) 466,601 30,454,411 2.552,608 (65,444) (59,336) (7.841,152) 7.246,336 4,045,372 417,508 (322,559) 36.427.744 (305,3633 36.119.381 308,361 9,790,239 (1,318,331) (12,378) (1.893,065) (11.616.987) (411.317) 6,568,071 356,258 (578,941) 381,549 (376.591) 504,950 3 (9.779.185) (4,314,9003 4,622,034 307,914 (9.779.105) 2.000.000) Cash flows from financing activities Dividend paid Re-payment of Scos laties including finance cont) Finance costs and Netshoed in financing wives (7,000,000) (11.970 (1650) 19.14.00 (204 (2004 17.00 CESOS Het increase/(decrease in cash and cash equivalente 5.30 Cash and cash equivalente al beginning of year Expected cred end of 1000 Consolidated Statement of Income - Year ended 31 December 2019 Kuwaiti Dinars 2019 Note 2018 Revenue Operating costs Operating profit 15 16 103,698,648 82,369,370 (82,553,173) (69,835,244) 21,145,475 12,534,226 12 582,381 (5,707,070) (73,202) (299,302) 18 Other income General and administrative expenses Finance costs Foreign currency loss Gain on sale and ease back of engines Expected credit loss financial assets Profit before contributions and taxes Zakat expense Contribution to Kuwait Foundation for the Advancement of Sciences (KFAS) National Labour Support Tax ONEST) Profit for the year 489,877 (6,897,211) (165,960) (223,249) 1.159,835 (100,969) 15.407,798 (93.695) (1.38.670) (214,236) 14,941,197 (61,300) 6.975,653 (69.991) (63,393) (174.972 6,667,292 Answer the questions using the data in the tables. Consolidated Statement of Financial Position as at 31 December 2019 Kuwaiti Dinars 2019 Note 2018 3 ASSETS Non-current assets Property and equipment Right of use Advance for maintenance Security deposits 21,971,472 5 6 20,819,335 82,691,388 11,613,952 3.043,855 118,168,526 14,166,560 2,600.919 35,747.951 312.557 1,172,192 23, 245,303 23,754,647 48414,597 166.653,225 249,113 1.914,890 55.490,085 405,106 24,194 62.884,345 Current assets Inventaries Security deposits Trade and other receivables Cash and bank bar Tot iets LIABILITIES AND EQUITY Equity Attributable to parent company's shareholders Share Capital Legal reserve Hedige serve Retained earnings Total 20,000,000 4.294,462 10 20,000,000 5,835,243 837.56 13,569,335 40,24233 13,541,950 27.03.12 Non-current liabilities Postyment benefits 18 12 2,320,70 2.454.100 8,552. 150 71.631.116 2.36 Current Trade and other Deferred revenue 1 2.2.10 4. 17.037.00 4.2.10 13 Totale and 21 11 14 QUESTION 3) (25 pts) Using the financial reports of ABC, a) Calculate the followings FOR 2019 ONLY Asset Turnover (2 pts) Equity Multiple (2 pts) Net Profit Ratio (2 pts) Return on Asset (ROA) (2 pts) Return on Equity (ROE) (2 pts) USE THE BELOW INDUSTRY AVERAGES FOR (b), (c), (d) and (e) parts of Question 3. Industry Industry Industry average average average Net Profit Ratio Asset Turnover Equity Multiple 0.15 2 1.50 b) What is the industry average for ROE in 2019? (2.5 pts) c) What is the industry average for ROA in 2019? (2.5 pts) d) Comparing the company's ROE you found in (a) with the industry average ROE that you found in (b), tell whether company's ROE is favorable or not. If your answer is unfavorable then what would you surBest company management to improve their ROE? (5 pts) e) Comparing the company's ROA you found in (a) with the industry average ROA that you found in (s), tell whether company's ROA is favorable or not. If your answer is unfavorable then what would you sucrest company management to improve their ROA? (5 pts Consolidated Statement of Cash Flows - Year ended 31 December 2019 Kuwaiti Dinars 2019 Note 2018 15,407,798 6,975,653 3,4 1,577,120 28,423 299,302 540,000 61,380 Cash flows from operating activities Profit before contributions and taxes Adjustments for Depreciation Finance costs Foreign exchange loss Provision for post employment benefits Gain on sale and lease back Expected credit loss on Financial Assets Interest on security deposit Provision for KFAS, Zakat & NEST Operating profit before working capital changes Decrease/(increase) in advance for maintenance Increase in inventories Increase in security deposits Increase in trade and other receivables Increase/(decrease) in maintenance payables Increase in trade and other payables Increase in deferred revenue Post-employment benefits paid Cash generated from operations Pald to KFAS, Zakat & NUST Net cash from operating activities Cash flows from investing activities Purchase of property and equipment (net of disposal Sale of Engine tut cash frontured in) vesting activities 12,409,435 2,660,994 223,249 406,376 (1.159,835) 100,969 (61,176) 466,601 30,454,411 2.552,608 (65,444) (59,336) (7.841,152) 7.246,336 4,045,372 417,508 (322,559) 36.427.744 (305,3633 36.119.381 308,361 9,790,239 (1,318,331) (12,378) (1.893,065) (11.616.987) (411.317) 6,568,071 356,258 (578,941) 381,549 (376.591) 504,950 3 (9.779.185) (4,314,9003 4,622,034 307,914 (9.779.105) 2.000.000) Cash flows from financing activities Dividend paid Re-payment of Scos laties including finance cont) Finance costs and Netshoed in financing wives (7,000,000) (11.970 (1650) 19.14.00 (204 (2004 17.00 CESOS Het increase/(decrease in cash and cash equivalente 5.30 Cash and cash equivalente al beginning of year Expected cred end of 1000 Consolidated Statement of Income - Year ended 31 December 2019 Kuwaiti Dinars 2019 Note 2018 Revenue Operating costs Operating profit 15 16 103,698,648 82,369,370 (82,553,173) (69,835,244) 21,145,475 12,534,226 12 582,381 (5,707,070) (73,202) (299,302) 18 Other income General and administrative expenses Finance costs Foreign currency loss Gain on sale and ease back of engines Expected credit loss financial assets Profit before contributions and taxes Zakat expense Contribution to Kuwait Foundation for the Advancement of Sciences (KFAS) National Labour Support Tax ONEST) Profit for the year 489,877 (6,897,211) (165,960) (223,249) 1.159,835 (100,969) 15.407,798 (93.695) (1.38.670) (214,236) 14,941,197 (61,300) 6.975,653 (69.991) (63,393) (174.972 6,667,292 Answer the questions using the data in the tables. Consolidated Statement of Financial Position as at 31 December 2019 Kuwaiti Dinars 2019 Note 2018 3 ASSETS Non-current assets Property and equipment Right of use Advance for maintenance Security deposits 21,971,472 5 6 20,819,335 82,691,388 11,613,952 3.043,855 118,168,526 14,166,560 2,600.919 35,747.951 312.557 1,172,192 23, 245,303 23,754,647 48414,597 166.653,225 249,113 1.914,890 55.490,085 405,106 24,194 62.884,345 Current assets Inventaries Security deposits Trade and other receivables Cash and bank bar Tot iets LIABILITIES AND EQUITY Equity Attributable to parent company's shareholders Share Capital Legal reserve Hedige serve Retained earnings Total 20,000,000 4.294,462 10 20,000,000 5,835,243 837.56 13,569,335 40,24233 13,541,950 27.03.12 Non-current liabilities Postyment benefits 18 12 2,320,70 2.454.100 8,552. 150 71.631.116 2.36 Current Trade and other Deferred revenue 1 2.2.10 4. 17.037.00 4.2.10 13 Totale and 21 11 14