Beta Corp. Statement of comprehensive income For the year ended December 31, 20X5 (in $'000s) 20X5 20X4 115,000 37,375 77,625 Sales 108,500 36,890 71,610 Cost of goods sold Gross profit Expenses: Operating expense Depreciation expense Advertising expense Interest expense Total expenses Profit or loss before tax Income tax expense 17,250 11,500 5,750 9,775 44,275 33,350 20,700 12,650 16,275 10,850 5,425 8,650 41,200 30,410 19,530 10,880 Profit or loss Beta Corp. Statement of financial position As at December 31, 20X5 (in '$000s) 20X5 20X4 Current assets: Cash A/R Inventory Capital assets Total assets 28,525 34,500 25,800 66,800 155,625 24,700 21,070 30,125 63.460 139.355 Current liabilities: Accounts payable Unearned revenue Current portion of long-term debt Long-term liabilities: Long-tem debt Shareholders' equity Total liabilities and shareholders' equity 35,680 27,800 13,108 33,177 29,580 3,952 37,450 41.587 155.625 26,350 46.296 139.355

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Select financial information for Beta Corp. for the fiscal years ending December 20X4 and 20X5 is as follows:

please find the attached image 1 and 2

Additional information:
Shareholders’ equity for 20X3 was 48,138.


Which of the following statements regarding Beta Corp.’s profitability is true? Calculate gross margin and ROE for your analysis.


a) Beta’s gross margin has improved from the prior year, but it is weaker than the industry average. ROE has improved from the prior year, but it is weaker than the industry average.
b) Beta’s gross margin has improved from the prior year and is stronger than the industry average. ROE has improved from the prior year, but it is weaker than the industry average.
c) Beta’s gross margin has weakened from the prior year and is weaker than the industry average. ROE has weakened from the prior year, and it is weaker than the industry average.
d) Beta’s gross margin has weakened from the prior year and is weaker than the industry average. ROE has weakened from the prior year, but it is stronger than the industry average.

 

Industry averages
Gross margin
Retum on equity (ROE)
Current ratio
69.5%
32.5
1.3
Quick ratio
A/R turnover
Inventory tumover
Debt-to-equity ratio
Interest coverage ratio
1.1
3.0
1.3
1.5
4.3
Transcribed Image Text:Industry averages Gross margin Retum on equity (ROE) Current ratio 69.5% 32.5 1.3 Quick ratio A/R turnover Inventory tumover Debt-to-equity ratio Interest coverage ratio 1.1 3.0 1.3 1.5 4.3
Beta Corp.
Statement of comprehensive income
For the year ended December 31, 20X5
(in $'000s)
20X5
20X4
108,500
36,890
71,610
Sales
115,000
37,375
77,625
Cost of goods sold
Gross profit
Expenses:
Operating expense
Depreciation expense
Advertising expense
Interest expense
Total expenses
Profit or loss before tax
Income tax expense
17,250
11,500
5,750
9,775
44,275
33,350
20,700
12,650
16,275
10,850
5,425
8,650
41,200
30,410
19,530
10,880
Profit or loss
Beta Corp.
Statement of financial position
As at December 31, 20X5
(in '$000s)
20X5
20X4
Current assets:
Cash
A/R
Inventory
Capital assets
Total assets
28,525
34,500
25,800
66.800
155,625
24,700
21,070
30,125
63.460
139,355
Current liabilities:
Accounts payable
Unearned revenue
Current portion of long-term debt
Long-term liabilities:
Long-tem debt
Shareholders' equity
Total liabilities and shareholders' equity
35,680
27,800
13,108
33,177
29,580
3,952
37,450
41.587
155,625
26,350
46,296
139,355
Transcribed Image Text:Beta Corp. Statement of comprehensive income For the year ended December 31, 20X5 (in $'000s) 20X5 20X4 108,500 36,890 71,610 Sales 115,000 37,375 77,625 Cost of goods sold Gross profit Expenses: Operating expense Depreciation expense Advertising expense Interest expense Total expenses Profit or loss before tax Income tax expense 17,250 11,500 5,750 9,775 44,275 33,350 20,700 12,650 16,275 10,850 5,425 8,650 41,200 30,410 19,530 10,880 Profit or loss Beta Corp. Statement of financial position As at December 31, 20X5 (in '$000s) 20X5 20X4 Current assets: Cash A/R Inventory Capital assets Total assets 28,525 34,500 25,800 66.800 155,625 24,700 21,070 30,125 63.460 139,355 Current liabilities: Accounts payable Unearned revenue Current portion of long-term debt Long-term liabilities: Long-tem debt Shareholders' equity Total liabilities and shareholders' equity 35,680 27,800 13,108 33,177 29,580 3,952 37,450 41.587 155,625 26,350 46,296 139,355
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