Your answer needs to coverat least four ideas/criteriaindicated in the PDF solution in order toobtain the full four points.However, for the first question, there are five possible ideas you can come up with in your answer and for the second question there are seven. So if, for example, you address five of the ideas listed in the solution key, you still get four points.

For each question, Prof. Badia has provided an example of the type of criteria you should strive to address to receive the corresponding points. To receive a point for each idea, you should not just make assertions, but also arguments that offer supporting evidence. For example, if you state, Fibertech is very profitable, the statement may be correct, but its not enough to earn a full point. However, the statement would earn half a point.

For the full point, you should make the statement and explain why:

Why is it profitable? What categories on the financial statements allow you to arrive at this conclusion?

In other words, you should say something along these lines:

Fibertech is very profitable. The net profit is XYZ. The return on sales is X% (i.e. Net profit / Sales = XYZ/ ABC). The return on equity is XX% (i.e. Net profit / Average owner's equity for the year = XYZ / [(XXX + YYY)/2] = XX%).

ACCOUNTING: MAKING SOUND DECISIONS QUIZ 4 Fibertech GmbH is a distributor of outdoors technical clothing. The company outsources the production of clothing to external manufacturers in Bangladesh and sells the clothing under its own brands. Below you are provided with the balance sheet at the end of x3 and x4, and the profit & loss and cash Taccounts for x4. Note that some numbers are missing in the T-accounts. You'll have to infer them in the questions below. Fibertech GmbH Balance sheets at 31 December x3 and x4 (amounts in 000) Dec 31, x3 Dec 31, x4 50 200 540 (484) 56 306 90 200 580 (474) 106 396 Non-current assets Brands Land Building and equipment, gross less: Accumulated depreciation Building and equipment, net Total non-current assets Current assets Inventories Accounts receivable Prepaid insurance Cash Total current assets 250 400 4 340 994 350 500 6 239 1.095 1.300 1.491 Shareholders' equity Share capital Retained profits Total shareholders' equity 170 120 290 170 426 596 Non-current liabilities Long-term bank loan 600 450 Current liabilities Short-term portion of long-term bank loan Accounts payable Taxes payable Interest payable Total current liabilities 150 200 35 25 410 150 250 25 20 445 1.300 1.491 Total assets Total liabilities and shareholders' equity Page 1 Profit and loss year x4 Debit Credit - BB Cost of goods sold 1.400 2.200 Total sales Depreciation expense 40 15 Gain on sale of buildings and equipment Selling and administration salaries 240 Insurance expense ? Interest expense ? Income taxes ? 336 Net Income Cash Debit Credit BB 340 Receipts from customers 2.100 ? Proceeds from sale of 45 120 buildings and equipment 240 36 60 150 120 ? 40 EB 239 Payments to suppliers Purchase of equipment Payments of salaries Prepayments of insurance Payments of interest on loans Loan repayment Payments of taxes Payments of dividends Purchase of brand Additional note: Fibertech estimates its brands have an indefinite life and consequently they are not amortized. Page 2