The following Balance Sheets and Income Statements were extracted from the books of Company P and Company R who are...

bapa2k

Main

Home >Homework Answsers >Business & Finance homework help >Accounting homework help

The following Balance Sheets and Income Statements were extracted from the books of Company P and Company R who are in the same line of business. On January 1, 2010 Company A stock was valued at $5,000,000 and Company B, $ 14,000,000.

Balance Sheets for year ending December 31, 2010

Company P Company R

Fixed Assets	Cost $,000	Accum.Dep $,000	NBV $,000	Fixed Assets	Cost $,000	Accum.Dep $,000	NBV $,000
Building	20,000	6,000	14,000	Building	30,000	10,000	20,000
Machines	15,000	6,000	9,000	Machines	24,000	9,600	14,400
Vehicles	9,000	2,700	6,300	Vehicles	20,000	8,000	12,000
	44,000	14,700	29,300		74,000	27,600	46,400
Current Assets				Current Assets
Stock		18,000		Stock		40,000
Debtors		4,000		Debtors		10,000
Cash		12,000	34,000	Cash		22,000	72,000
Total Asset			63,300	Total Asset			118,400
Financed by:				Financed by:
Revenue reserves		50,000		Revenue reserves .		93,000
Ordinary shares		10,000	60,000	Ordinary shares		20,000	113,000
Current Liabilities				Current Liabilities
Creditors		3,000		Creditors		4,500
Accruals		300	3,300	Accruals		900	5,400
			63,300				118,400

Income Statements for period ending December 31, 2010

Details	Company P ,$’000	Company R, $’000
Sales	30,000	55,000
Cost of Sales	12,000	20,000
Gross Profit	18,000	35,000
Admin. & selling expenses	5,000	12,000
Profit before interests and taxes	13,000	23,000
Interests	1,500	3,500
Profit before taxes	11,500	19,500
Taxation	3,450	5,850
Profit after tax	8,050	13,650

Notes:

(1) Company P: Price per $2 share $5; Dividend per ordinary share 20 percent.

(2) Company R: Price per $5 share $10; Dividend per ordinary share 25 percent.

Required:

(a) Calculate the following ratios for Company A and Company B for the financial year ending December 31, 2010:

(i) Return on Capital Employed. (2 marks)

(ii) Debtors Collection Period. (2 marks)

(iii) Stock Turnover. (2 marks)

(iv) Acid Test Ratio. (2 marks)

(v) Net Profit Percentage. (2 marks)

(vi) Dividend yield. (2 marks)

(vii) Profit per ordinary share. (2 marks)

(viii) Earnings Yield. (2 marks)

(ix)Current ratio (2 marks)

(x) Creditors payment period (2 marks)

(b) Assume that companies P and R are companies in the new cars market. Use the Stock Turnover Ratio and the Profit per Ordinary Share Ratio to compare the performance of both companies for the financial year 2010 (3 marks)

13 years ago
999999.99

Report issue

Answer(0)

Bids(0)

other Questions(10)