Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Chapter 17, Problem 13QS
To determine
Identify whether the change in ratio value from 2016 to 2017 is usually regarded as Favourable or unfavourable.
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For each ratio listed, identify whether the change in ratio value from the prior year to the current year is favorable or unfavorable.
Set out below are the financial statements for KLEE Inc. Limited:
Profit and Loss Accounts ($)
2015
(S000's)
2016
(5000's)
Sales
285
200
Profit before interest and tax
92
84
Interest
10
10
Profit on ordinary activities before taxation
82
74
Тахабоn
32
29
50
Profit on ordinary activities after taxation
Dividends
Retained profit
15
15
35
30
Balance Sheets ($)
Fixed Assets
Fixed Assets
24
58
Current Assets
Stock
25
20
Debtors
Cash
21
20
3
49
48
Current Liabilities
Trade Creditors
18
18
Тахafon payable
Proposed dividend
11
8
15
15
42
41
Net Current Assets
7
5
31
61
Creditors: Amounts falling due after more than one year
10% Debentures
10
10
Total Net Assets
21
51
Shareholders' Funds
Share Capital
Profit and loss account
5
5
18
48
21
51
For the return on equity (ROE) and return on assets (ROA) ratios, perform a DuPont decomposition andanalyze the components of the ratios in both years. Comment on which components of the ROE and ROAratios are driving the changes in the ratios you observe.
Here is my ROE for years 2021 (1728.1 / 11,951.5= 14.5%) and 2020 (1066.8 / 9759.1= 11.3%)
Here is my ROA for 2021 (1728.1 / 13,555) * 100 = 12.7488% and 2020 (1066.8 / 11,168.9) * 100 = 9.5515%
Chapter 17 Solutions
Principles of Financial Accounting.
Ch. 17 - A companys sales in the prior year were 300,000...Ch. 17 - Prob. 2MCQCh. 17 - What is Ella Companys acid-test ratio? a. 2.39 b....Ch. 17 - Prob. 4MCQCh. 17 - What is Ella Companys equity ratio? a. 25.78% b....Ch. 17 - Explain the difference between financial reporting...Ch. 17 - Prob. 2DQCh. 17 - Prob. 3DQCh. 17 - Prob. 4DQCh. 17 - Prob. 5DQ
Ch. 17 - Why is working capital given special attention in...Ch. 17 - What does the number of days sales uncollected...Ch. 17 - Prob. 8DQCh. 17 - Prob. 9DQCh. 17 - Prob. 10DQCh. 17 - Prob. 11DQCh. 17 - Prob. 12DQCh. 17 - Prob. 13DQCh. 17 - Refer to Apples financial statements in Appendix...Ch. 17 - Prob. 15DQCh. 17 - Prob. 16DQCh. 17 - Use Samsungs financial statements in Appendix A to...Ch. 17 - Prob. 1QSCh. 17 - Identify which standard of comparison, (a)...Ch. 17 - Prob. 3QSCh. 17 - Prob. 4QSCh. 17 - Prob. 5QSCh. 17 - Prob. 6QSCh. 17 - Mifflin Co. reported the following for the current...Ch. 17 - Prob. 8QSCh. 17 - Prob. 9QSCh. 17 - Prob. 10QSCh. 17 - Prob. 11QSCh. 17 - Prob. 12QSCh. 17 - Prob. 13QSCh. 17 - Prob. 14QSCh. 17 - Which of the following gains or losses would...Ch. 17 - Building blocks of analysis Match the ratio to the...Ch. 17 - Prob. 2ECh. 17 - Prob. 3ECh. 17 - Prob. 4ECh. 17 - Prob. 5ECh. 17 - Prob. 6ECh. 17 - Refer to Simon Companys balance sheets in Exercise...Ch. 17 - Prob. 8ECh. 17 - Prob. 9ECh. 17 - Prob. 10ECh. 17 - Prob. 11ECh. 17 - Prob. 12ECh. 17 - Prob. 13ECh. 17 - Prob. 14ECh. 17 - Prob. 15ECh. 17 - Prob. 16ECh. 17 - In the current year, Randa Merchandising, Inc.,...Ch. 17 - Use the financial data for Randa Merchandising,...Ch. 17 - Selected comparative financial statements of...Ch. 17 - Selected comparative financial statements of...Ch. 17 - Prob. 3APCh. 17 - Selected current year-end financial statements of...Ch. 17 - Comparative ratio analysis Summary information...Ch. 17 - Selected account balances from the adjusted trial...Ch. 17 - Prob. 1BPCh. 17 - Prob. 2BPCh. 17 - Prob. 3BPCh. 17 - Prob. 4BPCh. 17 - Summary information from the financial statements...Ch. 17 - Prob. 6BPCh. 17 - Prob. 17SPCh. 17 - Use Apples financial statements in Appendix A to...Ch. 17 - Prob. 2AACh. 17 - Prob. 3AACh. 17 - Prob. 1BTNCh. 17 - Prob. 3BTNCh. 17 - Prob. 5BTN
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- Comment on whether or not if the ratios are favourable or unfavourable Current Ratio 2016 2017 2018 2019 2020 BHP 1.44 1.85 2.51 1.89 1.45 RIO 1.61 1.71 1.98 1.56 1.80 FMG 1.48 1.18 1.33 1.37 2.25arrow_forwardRequired 1. Compute each year’s current ratio. Round ratios to one decimal. 2. Express the income statement data in common-size percents. Round percents to two decimals. 3. Express the balance sheet data in trend percents with 2017 as the base year. Round percents to two decimals. Analysis Component 4. Comment on any significant relations revealed by the ratios and percents computed.arrow_forwardWhat is the comparative statement of financial condition for 2019 and 2020 showing peso and percentage for each item (horizontal analysis)?arrow_forward
- choose: When a balance sheet amount is related to an income statement amount in comparing a ratio a. The ratio losses its historical perspective because at the beginning of the year amount is combined with an end of the year amount. b. The income statement amount should be converted to an average for the year. c. Comparisons should be converted to market value d. The balance sheet amount should be converted to an average for the year.arrow_forwarda) Based on the information provided, calculate the following ratios for the years ended 31December 2021 and 2020. You should give the formula for each ratio, in addition to your calculation.I. Gross profit marginII. Operating profit marginIII. Return on equityIV. Current ratioV. Gearingarrow_forwarda) Calculate on the following ratios for AZ Trading for 2020 and 2021: i. Debt-to-equity ratio ii. Net profit margin iii. Current ratio iv. Inventory turnover ratio b) Provide comments in terms of liquidity, profitability, efficiency and solvency based on the computed ratios in (a) above. c) List THREE (3) objectives of ratio analysis.arrow_forward
- The question is required to answer year by year. Meaning separately 2016 quick ratio, 2017 quick ratio etc. Thank youarrow_forward1.Calculate the break‐even point for Pearson & Litt for 2019 and 2020. 2. Compare the results of the 2019 and 2020 break‐even point and explain why there might be a difference. 3. The current ratio reflects the relationship between the value of the current assets and the extent of the current liabilities of a business. 4. Calculate the current ratio for Pearson & Litt for 2019. 5. Explain the results of the current‐test ratio. HINT: Include the minimum ratio recommended for the ratio in your answer. 6. The gross profit margin indicates how profitable sales have been. 7. Calculate the gross profit margin for Pearson & Litt for 2020. 8. Explain the results of the gross profit margin calculation. 9. Financial planning forms an integral part of the strategic planning of a firm. 10. Differentiate between traditional budgeting and zero‐base budgeting. 11. Recommend one of these budgeting methods to Pearson & Litt and provide reasons for your recommendation.arrow_forwardThe current ratio at December 2017 was: Equal or below 1.45 Between 1.46 and 2.92 Between 2.93 and 5.86 Equal or above 5.87 Not enough data provided to calculate itarrow_forward
- 1. Solve the following ratios from year 2018-2020. Show complete solutions/computations. -OPERATING MARGIN-BASIC EARNINGS POWER-PRICE EARNINGS RATIOarrow_forwardUsing the financial statements in the image, calculate the following ratios for both the FY 2017 and FY 2018: Current Ratio Quick Ratio Total Asset Turnover Average Collection Total Debt to Total Assets Times Interest Earned Net Profit Margin Return on Assets Return on Equity Modified Du Point Equation for FY 2018 PE Ratio Market to Book Ratioarrow_forwardPlease find the following ratios for both year 2017 and year 2018 based on following data RATIO AT ROA L ROEarrow_forward
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