Question
QUESTION 3 (40 MARKS) You have been asked by your CEO to evaluate, analyse and calculate commonly used ratios relating to a companys profitability, liquidity,
QUESTION 3 (40 MARKS)
You have been asked by your CEO to evaluate, analyse and calculate commonly used ratios relating to a companys profitability, liquidity, solvency and management efficiency.
Requirement:
- Complete the balance sheet and sales data (fill in the blanks), using the following financial data:
Debt/net worth 60%
Acid test ratio 1.2
Asset turnover 1.5 times
Day sales outstanding in accounts receivable 40 days
Gross profit margin 30%
Inventory turnover 6 times
Balance sheet
Cash ________ Accounts payable ________
Accounts receivable ________ Common stock RM15,000
Inventories ________ Retained earnings RM22,000
Plant & equipment ________
Total assets ________ Total liabilities ________
& capital
Sales ________
Cost of goods sold ________
- Explain how do analysts use ratios to analyse a firms leverage? Which ratios convey more important information to a credit analyst those revolving around the levels of indebtedness or those measuring the ability to service debt? What is the relationship between a firms level of indebtedness and risk? What must happen in order for an increase in leverage to be successful? Discuss and illustrate all your answer. PLZ Answer clear Balance sheet
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