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Assignment 1 .pdf
C.
debt-to-total-assets ratio
55%
d. debt-to-equity ratio
1 times
5 times
5 times
35 days
e.
times-interest-earned ratio
f. fixed-charges coverage ratio
g. average collection period
h. inventory turnover ratio
i. capital assets turnover ratio
j. total assets turnover ratio
6 times
2 times
1 times
k. profit margin on revenue ratio 6%
1. return on revenue ratio (Profit/Revenue)
return on total assets ratio
3%
m.
4%
return on equity ratio
12%
n.
Statement of Financial Position
As at December 31, 2013
(in S)
Non-current assets
Equity
Property, plant, and equipment
2.600,000 Preferred shares
100,000
Accumulated depreciation
(700,000) Common shares
500,000
Total non-current assets
1,900,000 Retained earnings
560,000
Total equity
1,160,000
Long-term borrowings
1,640,000
Current assets
Current liabilities
Inventories
1,100,000 Trade and other payables
710,000
Trade receivables
900,000
Notes payable
250,000
Term deposits
120,000
Accruals
260,000
Cash
90,000
Current income taxes payable
90,000
Total current assets
2,210,000
Total current liabilities
1,310,000
Total assets
4,110,000
Total equity and liabilities
4,110,000
Statement of Income
For the year ended December 31, 2013
(in S)
Revenue
4,500,000
Cost of sales
(3,300,000)
Gross profit
1,200,000
Other income
20,000
Expenses
Distribution costs
(350,000)
Rent
(100,000)
Administrative expenses
(345,000)
(795,000)
Finance costs
(120,000)
Depreciation
(50,000)
Total other income/costs
(945,000)
Profit before taxes
255,000
Income tax expense
(127,500)
Profit for the year
1 27,500
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Assignment 1 .pdf
CASE 1: PICKWICK RESTAURANTS
Jaclyn Hargrove is the owner of six Pickwick Restaurants. For the past 10 years, she
has always relied on her accountant to analyze her financial statements. Jaclyn feels
that if she were able to understand her financial statements, she would be able to
improve her financial performance. More importantly, she would be able to make
better decisions that touch on all aspects of her business, from the management of
working capital to making investments.
Jaclyn has just purchased accounting software that can provide her with monthly,
quarterly, and yearly financial statements and, more importantly, all types of ratios that
would help her improve her analysis and decisions.
Jaclyn asks you for some advice in understand the meaning of her financial state-
ments. She shows you her December 31, 2013, statement of financial position and
statement of income and asks you to calculate and explain the meaning of the more
important financial ratios.
To help Jaclyn understand financial ratios, calculate the financial ratios by using the
2013 statement of financial position and statement of income, and explain to her the
meaning and significance of each ratio:,
"External Ratios (Benchmark)
current ratio
1.5 times
1 times
b. quick ratio
c. debt-to-total-assets ratio
d. debt-to-equity ratio
55%
1 times
e. times-interest-earned ratio
f. fixed-charges coverage ratio
g. average collection period
h.
5 times
5 times
35 days
inventory turnover ratio
i. capital assets turnover ratio
6 times
2 times
j. total assets turnover ratio
1 times
k. profit margin on revenue ratio 6%
1. return on revenue ratio (Profit/Revenue) 3%
m.
return on total assets ratio
4%
n.
return on equity ratio
12%
Statement of Financial Position
As at December 31, 2013
(in S)
Non-current assets
Equity
2,600,000 Preferred shares
100,000
Property, plant, and equipment
Accumulated depreciation
(700,000) Common shares
500,000
Total non-current assets
1,900,000 Retained earnings
560,000
Total equity
1,160,000