Question 3 financial statement analysis 8 marks bps

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QUESTION 3 Financial Statement Analysis (8 marks) BPS Ltd, a supplier of telecommunications equipment, retails its products through suburban outlets. Shown below are the calculations of some of its key financial ratios for 2011 and 2012. 2012 2011 Return on Equity 12% 10% Return on Assets 7% Financial leverage 153% 123% Profit margin 18% 16% Asset turnover 0.40 0.50 Days in inventory 71 days 50 days Days in debtors 47 days 45 days Current ratio 1.6 1.5 Quick ratio Debt-to-Equity ratio 0.7 1.3:1 1.1 1:1 Return on Equity Operating Profit after Tax Shareholders' Equity Return on Assets Earnings Before Interest and Tax Total Assets Financial Leverage Total Assets Total Shareholders’ Equity Profit Margin Operating Profit after Tax Sales Asset Turnover Sales Total Assets Days in Inventory Average Inventory x 365 COGS Days in Debtors Average Trade Debtors x 365 Credit Sales Current Ratio Current Assets Current Liabilities Quick Ratio Debt to Equity Ratio Current Assets - Inventory Current Liabilities Total Liabilities Total Shareholders' Equity 8%
ACCT1501 Practice Exam Questions & Solutions 2013S1 6 Required Analyse BPS’s profitability, asset management, liquidity and financial structure for 2012 using the ratio information shown above. (8 marks)
ACCT1501 Practice Exam Questions & Solutions 2013S1 7 QUESTION 4 ADJUSTING ENTRIES AND FINANCIAL STATEMENTS (20 Marks) The following pre-adjusted trial balance has been prepared for Dog Company as at 30 June 2010 (for the 12 months beginning on 1 July 2009): DR CR Cash at Bank 10,000 Accounts Receivable 200,000 Allowance for Doubtful Debts 1,000 Inventory 100,000 Prepaid Rent 10,000 Property, Plant and Equipment 450,000 Accumulated Depreciation - PPE 200,000 Accounts Payable 60,000 Bank loan 50,000 Contributed Capital 310,000 Retained Profit at 1 July 2009 34,000 Sales 450,000 Cost of Goods Sold 265,000 Interest Expense 5,000 Wages Expenses 80,000 Rent Expense 5,000 1,115,000 1,115,000 The following information is given which may give rise to year end adjustments: Depreciation on Property, Plant and Equipment is provided for on a straight line basis at 10% per annum. The balance in Prepaid Rent relates to the 12 month period from 1 January 2010 to 31 December 2010.

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