QUESTION TWO

The financial statements of three companies in the same industry are given below; Balance sheets X ltd (000) Y ltd (000) Z ltd (000) Cash 30 20 5 Accounts receivables 200 260 290 Inventory 400 480 600 Net fixed assets 800 800 800 1,430 1,560 1,695 Accounts payables 230 300 380 Accruals 200 210 225 Short term loans 108 100 140 Long term loans 300 300 300 Common stock 92 100 100 Retained earnings 500 550 550 1,430 1,560 1,695 Income statement extracts X ltd (000) Y ltd (000) Z ltd (000) Sales 3,000 4,300 3,800 Cost of goods sold 3,200 3,600 3,300 Net profit 200 200 200 Income statement items should be expressed as a percentage of total revenue Balance sheet items should be expressed as a percentage of total assets Required Compare the performance of the three companies using common size analysis and classify the companies based on the indicators below. NB ensure that all your calculations are rounded off to the nearest whole number

A. Determine the company with the highest level of profitability.

Answer 1 Choose..

i) None

ii) Y LTD

iii)X LTD

iv) Z LTD

B. Determine the company with the lowest expenses.

Answer 2 Choose

i) None

ii) Y LTD

iii)X LTD

iv) Z LTD

C. Determine the company with the lowest level of common stock.

Answer 3 Choose...

i) None

ii) Y LTD

iii)X LTD

iv) Z LTD

D. Determine the worst performer when you rank the companies based on the retained profits.

Answer 4 Choose...

i) None

ii) Y LTD

iii)X LTD

iv) Z LTD

E. Determine the most geared company (focus on long term debt).

Answer 5 Choose...

i) None

ii) Y LTD

iii)X LTD

iv) Z LTD

F. Determine the company that has committed the least resources in fixed assets.

Answer 6 Choose...

i) None

ii) Y LTD

iii)X LTD

iv) Z LTD

G. You intend to invest in the company that has the lowest short term liabilities. Of the three companies, which one would you investing in?

i) None

ii) Y LTD

iii)X LTD

iv) Z LTD

Answer 7 Choose...

H. Determine the company with the lowest level of current assets.

Answer 8 Choose...

i) None

ii) Y LTD

iii)X LTD

iv) Z LTD