Dear Tutor, can you please help to calculate the ratios for 2017 that would reflect each of the following (Where applicable, round off answers to two decimal places.):
The profit of the company relative to sales after deducting the cost of sales.
The number of times that investors are willing to pay for each Rand of the company's earnings.
The proportion of the total assets that are financed by total debt.
The ability of the company to repay its short-term debts under distress conditions, on the assumption that inventories would have no value at all.
A measure of the dividends earned per share of common stock.
An indication of the percentage of profit that has been put back into the company.
Comment on the following ratios that have been calculated for Oasis Ltd.
Provide two significant comments for each ratio.
Return on capital employed
Excerpts of the financial data of Oasis Ltd for 2017 are as follows:
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2017
Sales 6 500 000
Cost of sales 4 400 000
Operating profit 664 000
Interest expense 88 000
Profit before tax 576 000
Company tax 172 800
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017
Non-current assets 1 960 000
Inventories 2 600 000
Accounts receivable 776 000
Cash 8 000
5 344 000
Equity and liabilities
Ordinary share capital (704 000 shares) 1 408 000
Retained earnings 1 152 000
Long-term loan (12% p.a.) 740 000
Accounts payable 1 744 000
Dividends payable (for 2017) 300 000
5 344 000
All purchases and sales of inventories were on credit.
Inventories on 31 December 2016 amounted to R2 400 000.
The following ratios were calculated for 2017 and 2016:
Profit margin 6.20% 13.63%
Return on capital employed 20.12% 27.62%
The market price of the company's shares for 2017 and 2016 were R4.00 and R3.50 respectively.
Thank you loads
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