Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following information is available for Abbotsford Ltd. They are a Retailer of clothes. 2012 2011 Sales revenue $1,600 000 $1 470 000 Interest
The following information is available for Abbotsford Ltd. They are a Retailer of clothes. 2012 2011 Sales revenue $1,600 000 $1 470 000 Interest expense 69 000 71 000 Income tax expense 124 400 137 900 Operating profit after income tax 146 000 144 000 Preference Share dividends 9 000 9 000 Total Assets. 1 230 000 1300 000 730 000 Total Liabilities 810 000 Preference Share Capital 150 000 150 000 Ordinary Share Capital 263 000 249 000 Retained Profits 157 000 21 000 Required A. Calculate the following ratios for 2012: 1. Return on total assets. 2. Return on ordinary shareholders' equity. Calculate the following ratios for 2011 and 2012: 1. Profit margin. 2. Debt ratio. 3. Times interest earned. C. If the Return On Total Assets of the firm has decreased over the period, what are the most likely reasons that have caused the deterioration. D. Explain briefly which (if any) of the above Ratios would be useful in measuring the short-term liquidity, long-term financial stability, profitability or the cash flow efficiency of Abbotsford Ltd. # For the Formula for each of the above Ratio (s), refer to Chapter 19 of the textbook "Financial Accounting" by Hoggett et al. (2021), (11th Edition). N.B. In the Final Exam, the correct Formulae for the respective Ratio(s) will be given to you. B.
Step by Step Solution
★★★★★
3.23 Rating (150 Votes )
There are 3 Steps involved in it
Step: 1
A 1 Return on Total Assets Earnings after tax interest Total assets 100 146000690001...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