5. Babs Ltd. assembles computers in Ghana and faces a stiff competition from YES Computers. T...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
5. Babs Ltd. assembles computers in Ghana and faces a stiff competition from YES Computers. T statement of financial performance of Babs Ltd for the year 2017 is provided below. Income Statement for the year ended 31 December, 2017 GHC Sales Revenue 15,000 Cost of Sales (6,000) Gross profit 9,000 Other operating Expenses (1,500) Profit before interest and tax 7,500 Interest (4,000) 3,500 Tax (1,000) Net Profit 2,000 Balance Sheet as at 31 December, 2017 Non-Current Assets GHC 50,000 Current Assets: Inventory 2,000 Trade Receivables 3,000 Bank 18,000 23,000 73,000 Equity & Liabilities; Share Capital (100,000 shares) Retained Earnings Non-Current Liabilities 22% Loan Note Current liabilities Trade Payables 18,000 40,000 13,000 53,000 2,000 20,000 The ratios of the competitor is summarized below; 73,000 Gross Profit Margin 30% Net Profit Margin 25% Return On Capital Employed (ROCE) 8% Current Ratio 3 times (3:1) Acid Test Ratio Debt to Equity 2.8 times (2.8:1) 40% Inventory Turnover Period 20 days Trade Receivable Collection period 70 days Account Payable Holding Period 100 days Required a. Calculate comparable ratios for Babs Ltd. 5. Babs Ltd. assembles computers in Ghana and faces a stiff competition from YES Computers. T statement of financial performance of Babs Ltd for the year 2017 is provided below. Income Statement for the year ended 31 December, 2017 GHC Sales Revenue 15,000 Cost of Sales (6,000) Gross profit 9,000 Other operating Expenses (1,500) Profit before interest and tax 7,500 Interest (4,000) 3,500 Tax (1,000) Net Profit 2,000 Balance Sheet as at 31 December, 2017 Non-Current Assets GHC 50,000 Current Assets: Inventory 2,000 Trade Receivables 3,000 Bank 18,000 23,000 73,000 Equity & Liabilities; Share Capital (100,000 shares) Retained Earnings Non-Current Liabilities 22% Loan Note Current liabilities Trade Payables 18,000 40,000 13,000 53,000 2,000 20,000 The ratios of the competitor is summarized below; 73,000 Gross Profit Margin 30% Net Profit Margin 25% Return On Capital Employed (ROCE) 8% Current Ratio 3 times (3:1) Acid Test Ratio Debt to Equity 2.8 times (2.8:1) 40% Inventory Turnover Period 20 days Trade Receivable Collection period 70 days Account Payable Holding Period 100 days Required a. Calculate comparable ratios for Babs Ltd.
Expert Answer:
Answer rating: 100% (QA)
To calculate the comparable ratios for Babs Ltd we can use the financial information provided in the ... View the full answer
Related Book For
Essentials of Accounting for Governmental and Not for Profit Organizations
ISBN: 978-1259741012
13th edition
Authors: Paul A. Copley
Posted Date:
Students also viewed these finance questions
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
What is the minimum information that would be required if you wished to prepare an indirect-method statement of cash flows for ABC Company for the six months ended June 30, 2020? The company uses a...
-
Governments assert that their safety standards for food imports are important to ensure that their citizens not be harmed by unsafe foods. Comment on how such a concern may be a nontariff barrier.
-
After working a few years, you would like to extend your college education on a part-time basis. You know that your education can benefit your employer, but you can't really afford the fees for...
-
1. How is predictive analytics applied in Money ball? 2. What is the difference between objective and subjective approaches in decision making?
-
The data in Exercise 2.174. Use technology to find the correlation for the data indicated. Data From Exercise 2.174: Make a scatterplot of the data. Put the $X$ variable on the horizontal axis and...
-
Dalis Financial Services prepares tax returns for small businesses. Data on the companys total costs and output for the past six months appear in the table that follows. The results of regression...
-
Superior Limited's total overhead costs at various levels of activity are presented below: Month March April May June Machine Hours Total Overhead Costs 60,000 $216,800 50,000 194,000 70,000 239,600...
-
On October 1, 2019, Santana Rey launched a computer services company, Business Solutions, that is organized as a proprietorship and provides consulting services, computer system installations, and...
-
CIMA define Beyond Budgeting as: the idea that companies need to move beyond budgeting because of the inherent flaws in budgeting especially when used to set incentive contracts. It is argued that a...
-
In Problems 12-15, match each formula in Column A with the type of financial problem in Column B. Column A 15. m = 1 P() - (1 + 2) -nt Column B Sinking fund
-
A speed control system of an engine is shown in Fig. P1.2. Determine: (a) Sensitivity of closed loop system to changes in engine gain \(k_{1}\) and tachometer feedback gain \(k_{2}\). (b) Steady...
-
Use a calculator to evaluate an ordinary annuity formula \[A=m\left[\frac{\left(1+\frac{r}{n}ight)^{n t}-1}{\frac{r}{n}}ight]\] for \(m, r\), and \(t\) (respectively) given in Problems 7-22. Assume...
-
Find the present value of the ordinary annuities in Problems 21-32. Amount of Deposit m 32. $100 Frequency n quarterly Rate r 3% Time t 20 yr
-
In Problems 12-15, match each formula in Column A with the type of financial problem in Column B. Column A 14. m = A() (1+) - 1 Column B Present value of an annuity
-
If a firm has a P/E of 7, and its current price on the stock exchange is R2.10, how much is its EPS? Select one: 0 a. R0.30 b. R40.70 c. R7 d. R2.10
-
Explain the regulation of the secretions of the small intestine.
-
Using the annual financial report obtained for Exercise 11, answer the following questions: a. Review the General Fund column of the Balance Sheet for governmental funds. What are the major assets?...
-
Benton County maintains a tax agency fund for use by the County Treasurer to record receivables, collections, and disbursements of all property tax collections to all other units of government in the...
-
Consider FASB standards for mergers and acquisitions by not-for-profit organizations. Answer the following questions: a. What is the difference between a merger and an acquisition? b. What is the...
-
Using an economic balance sheet, which of the Laws current financial assets is most concerning from an asset allocation perspective? A. Equities B. Real estate C. Fixed income Raye uses a costbenefit...
-
Using the economic balance sheet approach, the Laws economic net worth is closest to: A. $925,000. B. $1,425,000. C. $1,675,000. Raye uses a costbenefit approach to rebalancing and recommends that...
-
Raye believes the previous advisers asset class specifications for equity and derivatives are inappropriate given that, for purposes of asset allocation, asset classes should be: A. diversifying. B....
Study smarter with the SolutionInn App