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Study the 2017 financial statements (on page 6) of two firms, Marshalls Inc. and Security Solutions (who are fierce competitors), and then calculate the following
Study the 2017 financial statements (on page 6) of two firms, Marshalls Inc. and Security Solutions (who are fierce competitors), and then calculate the following ratios so that you can make inter-firm comparisons. To get a higher grade, make sure that for each ratio you show its respective formula and workings/calculations [arrange the ratios in a table].
a. Return on Capital Employed (ROCE)
b. NetProfitMargin(ProfitinRelationtoTurnover)
c. Asset Turnover Ratio
d. Receivable (Debtor) Days Ratio
e. Inventory (Stock) Turnover Ratio
f. Gross Profit Margin
g. Drawing upon all your knowledge of accounting and based on your calculations
above:
i. Which firm was the most efficient? Give possible reasons.
ii. Which firm was the most profitable? Give possible reasons.
Sales 2,000,000 Less: Cost of Goods Sold
Opening Stock 87,400
Purchases 890,000 655,000
Marshalls Inc. Security Solutions
2,200,000
977,400
(48,800) (90,000)
220,000
Less: Closing Stock
Gross Profit
Less: Expenses Business Rates
Commission Expense Salaries and Wages Electricity
Fuel Expense Depreciation
Postage
Van Repairs Miscellaneous Expenses
Net Profit
Non-Current Assets Factory Building
Fixtures and Fittings Vans
Machinery
Current Assets Inventory
Accounts Receivable Cash at Bank
Cash on Hand
Current Liabilities
Accounts Payable
Working Capital
Net Assets
Owner's Equity (Financed by) Capital at the Start of year
Retained Profit Less: Drawings
875,000
(928,600) (785,000)
2,500 31,000 212,200 7,200 12,500 3,300 710 1,945
1,071,400
1,415,000
15,000
45,000 350,000 9,100 17,000 3,300 920 540 4,900 7,200
(276,255) (448,060)
795,145 966,940
Marshalls Inc.
950,000 160,000 95,000 420,000
48,800
75,000 210,000 28,845 362,645
(147,500)
1,200,000 795,145 (155,000)
Security Solutions
950,000 151,000 87,000 414,000
90,000
83,000 457,000 54,000 684,000
1,625,000
1,602,000
(186,100)
215,145 497,900
1,840,145 2,099,900
1,456,960 966,940 (324,000)
1,840,145 2,099,900
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