Calculate the gross profit margin and net profit margin, Financial Accounting

Assignment Help:

Assets                                                       2011                                                                        2010

Non Current Assets                         4 800 000                                                       3 300 000

Inventory                                       500 000                                                         700 000

Receivables                                    350 000                                                          420 000

Cash                                             280 000                                                          140 000

                                                              5 930 000                                                                    4 560 000

Equity and Liabilities

Share Capital (R2 shares)               2 600 000                                                                1 700 000

Retained Income                            500 000                                                                     440 000

Long term Debt                              2 000 000                                                                   1 800 000

Payables                                        830 000                                                                     620 000

                                                              5 930 000                                                                                    4 560 000

Their abbreviated Income Statement for the year ended 2011:

Sales (75% on credit)             2 400 000

Cost of sales                          1 600 000

Depreciation                              80 000

Interest expense                         90 000

Tax (30%)                                 160 000

Net Income after Tax                 300 000

Dividends                                  240 000

Retained Income                         60 000

NB: Company X is a wine retailer. Their shares are currently trading at $3 per share.

Required

1.1. Calculate the gross profit margin and their net profit margin.

1.2. Calculate the EPS and DPS for the current year. Explain what occurs to the difference between the EPS and the DPS value, from an accounting perspective. 

1.3. Calculate the return on equity. Will shareholders be happy with this return? Explain.

1.4. Calculate and comment on the acid test ratio for both years.

1.5. Calculate and comment on the debt equity ratio for both years.

1.6. Calculate the stock turnover rate and explain the meaning of this ratio.

1.7. What is the period for which they have stock on hand? Is this acceptable? Explain.


Related Discussions:- Calculate the gross profit margin and net profit margin

Compute the npv of the cash flows, Ace Company has a 30 percent marginal ta...

Ace Company has a 30 percent marginal tax rate and uses a 12% discount rate to compute NPV. The firm started a venture that will yield the following before-tax cash flows: year 0,

Calculate interest rate , As a borrower, which of the following two 30 year...

As a borrower, which of the following two 30 year, monthly payment loans would you choose (and why) if you had a 10 year expected payment horizon: 5% interest rate with 3.5 points,

Techniques of inventory control, Inventory control implies a planned approa...

Inventory control implies a planned approach of ascertaining while to buy, how much to buy and how much to stock hence costs including storing and buying are optimally minimum, wit

Bank reconcillation statement, cheque issued and presented for payment 400 ...

cheque issued and presented for payment 400 in cash book debit balance

Proof of debts-bankruptcy and liquidation, PROOF OF DEBTS The following...

PROOF OF DEBTS The following rules apply as to the proving of debts: 1) A creditor has no right to vote or receive dividends until his debt is proved to the satisfaction of th

What you understand by the term gender budgeting, Question 1: (a) "MT...

Question 1: (a) "MTEF is about resource control, resource allocation and resource utilization." You are required to identify and discuss the different stages of MTEF. (N

Equity shareholders, Equity shareholders, potential and present, seem prima...

Equity shareholders, potential and present, seem primarily to the company's record of earnings. They are thus interested in relationships as earnings per share or EPS and dividends

Whats the company''s return on investments?, Sales= 4,500,000 Min required ...

Sales= 4,500,000 Min required return= 15% Avg Operating assets= 1,800,00 Residual Income= 90,000 !) Whats the company's return on investments? Please show work so I can see how

Financial ratios, Financial ratios have been categorized in a variety of ma...

Financial ratios have been categorized in a variety of manners. You may determine the subsequent broad bases having been utilized in current literature:  Primacy Criterion: Th

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd