Currency Unit: LC FY2017 FY2016 Cash 150 100 Accounts recievanble 800 650 Inventory 1,400 1,200 Current assets 2,350 1,950 Net fixed assets 1,000 900 Total assets 3,350 2,850 Accounts payable 500 500 Current debt 100 200 Long-term debt 1,150 950 Total liabilities 1,750 1,650 Common stock 400 400 Retained earnings 1,200 800 Total equity 1,600 1,200 Total Lliabilities and equity 3,350 2,850 Currency Unit: LC FY2017 Revenue 5,500 Cost of goods sold -3,800 Gross margin 1,700 Other expenses -500 Depreciation expense -800 Net income 400
Kid, Inc. operates relatively independently from Papa Internationa. For 2017, how much cumulative translation adjustment (CTA) will appear Papa's consolidated balance sheet for FY2017? You have to show all of your calculation work to get credit points. (Hint: You have to translate all financial data or relevant accounts for FY2017 into USD).
2) Calculate the gross profit margin ratio (gross margin/revenue) and the return on assets (net incone/total assets) ratio from Kid's 2017 U.S. dollar financial statements translated using the current rate method. (Hint: you have to translate all component accounts (for FY2017) of the ratios into USD).
3) As compared to the current rate method, determine the impact of the temporal method on accounts receivable turnover ratio and gross profit margin ratio from Kid, Inc.'s 2017 U.S. dollar financial statements (circle an appropriate choice in the parentheses below). Make sure to justify your answers.
Account receivable turnover ratio under the temporal method will be (greater than, the same as, lower than) that under the current rate method.
Gross profit margin ratio under the temporal method will be (greater than, the same as, lower than) that under the current rate method.