Fairfield Foods plc is a catering establishment which also owns shops and cafes. Due to increased competition the company has recently experienced declining profitability. In order to ascertain whether this is a sector-wide problem the directors wish to investigate this trend. As a result, they have acquired average ratios for the sector. Some of these equivalent ratios are shown below. Sector averages for the year ended 30 June 2020: Return on capital employed Operating profit margin Net asset turnover Inventory holding period Debt to equity The following information has been extracted from the draft financial statements of Fairfield Foods plc for the year ended 31 December 2020: Revenue Cost of Sales Gross Profit Statement of profit or loss for the year ended 31 December 2020: £'000 201,600 (140,000) 61,600 (35,280) 26,320 Operating expenses Profit from operating Non-current assets Inventory Equity: Equity shares of £1 each Extracts from the Statement of financial position as at 31 December 2020 £'000 Revaluation surplus Retained earnings Total Equity Non-current liabilities: 10% bank loan 18.6% 8.6% 2.01 110,000 7,920 4 days 80% 34,000 10,800 20,960 65,760 28,800

Fairfield Foods plc is a catering establishment which also owns shops and cafes. Due to increased competition the company has recently experienced declining profitability. In order to ascertain whether this is a sector-wide problem the directors wish to investigate this trend. As a result, they have acquired average ratios for the sector. Some of these equivalent ratios are shown below. Sector averages for the year ended 30 June 2020: Return on capital employed Operating profit margin Net asset turnover Inventory holding period Debt to equity The following information has been extracted from the draft financial statements of Fairfield Foods plc for the year ended 31 December 2020: Revenue Cost of Sales Gross Profit Statement of profit or loss for the year ended 31 December 2020: £'000 201,600 (140,000) 61,600 (35,280) 26,320 Operating expenses Profit from operating Non-current assets Inventory Equity: Equity shares of £1 each Extracts from the Statement of financial position as at 31 December 2020 £'000 Revaluation surplus Retained earnings Total Equity Non-current liabilities: 10% bank loan 18.6% 8.6% 2.01 110,000 7,920 4 days 80% 34,000 10,800 20,960 65,760 28,800

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 3PB: The income statement comparison for Rush Delivery Company shows the income statement for the current...

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Question 2. Below are the operating income on sales ratios for three international companies: Year Company A Company B Company C 2014 4 4 4 2015 5 6 7 2016 8 7 7 2017 5 8 8 2018 4 8 9 Required: Which company is more profitably over the years? Measure the stability of this ratio? Advise the investor on which company he should invest in?
Fairfield Foods plc is a catering establishment which also owns shops and cafes. Due to increased competition the company has recently experienced declining profitability. In order to ascertain whether this is a sector-wide problem the directors wish to investigate this trend. As a result, they have acquired average ratios for the sector. Some of these equivalent ratios are shown below. Sector averages for the year ended 30 June 2020: Return on capital employed 18.6%Operating profit margin 8.6%Net asset turnover 2.01Inventory holding period 4 daysDebt to equity 80% The following information has been extracted from the draft financial statements of Fairfield Foods plc for the year ended 31 December 2020:Statement of profit or loss for the year ended 31 December 2020: £’000Revenue 201,600Cost of Sales (140,000)Gross Profit 61,600Operating expenses (35,280)Profit from operating 26,320 Extracts from the Statement of financial position as at 31 December 2020 £’000Non-current assets…
What is the comparison (analysis) of the Returned on Invested Capital (ROIC) of Industry Average Ratio and the Company A Ratio? THE ROIC ratios has decreased and increased. Why? Industry Average ROIC 2015: 4.30% 2016: 4.90% 2017: 3.00% 2018: 2.58% 2019: 4.02% Company A Total ROIC 2015: 3.77% 2016: 1.46% 2017: 2.90% 2018: 2.94% 2019: 2.24%
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