The financial statements of RenoReno Company appear below for the year 2020: Assets Property, plant and...

 

  

Transcribed Image Text:

The financial statements of RenoReno Company appear below for the year 2020: Assets Property, plant and equipment Inventory Prepaid expenses Accounts receivable Cash and short-term investments $210,000 20,000 18,000 30,000 45,000 $323.000 Total Assets Equity and Liabilities Shareholders' cquity-ordinary Non-current liabilities Current liabilities $ 160,000 95,000 68,000 $323,000 Total Equity and Liabilities Income Statement Sales revenue Cost of goods sold Gross pofit Operating expenses Net income $ 120,000 66,000 54,000 30,000 $ 24,000 Number of ordinary shares Market price of ordinary shares Dividends per share 6,000 shares $20 $0.50 Required: a. Using the financial statements, compute the following ratios for RenoReno Company for 2020. Show all computations. (4 Maro) 1. Current ratio. 2. Accounts receivable tumover in times and days. 3. Inventory turnover in times and days. 4. Return on assets. 5. Profit margin. 6. Return on ordinary sharcholders' equity. 7. Price-Earnings ratio. 8. Payout ratio. b. What is a major advantage of using percentages rather than dollar amounts in doing horizontal and vertical analyses? (2 Marka) c. The following data are available for Nichols Corporation. Sale of land Sale of equipment Issuance of ordinary shares Purchase of equipment Payment of cash dividends Purchase of trucks by issuing bonds $400,000 200,000 280,000 120,000 240,000 250,000 What is the amount for Net cash provided (used) by investing activities? (3 Marks) The financial statements of RenoReno Company appear below for the year 2020: Assets Property, plant and equipment Inventory Prepaid expenses Accounts receivable Cash and short-term investments $210,000 20,000 18,000 30,000 45,000 $323.000 Total Assets Equity and Liabilities Shareholders' cquity-ordinary Non-current liabilities Current liabilities $ 160,000 95,000 68,000 $323,000 Total Equity and Liabilities Income Statement Sales revenue Cost of goods sold Gross pofit Operating expenses Net income $ 120,000 66,000 54,000 30,000 $ 24,000 Number of ordinary shares Market price of ordinary shares Dividends per share 6,000 shares $20 $0.50 Required: a. Using the financial statements, compute the following ratios for RenoReno Company for 2020. Show all computations. (4 Maro) 1. Current ratio. 2. Accounts receivable tumover in times and days. 3. Inventory turnover in times and days. 4. Return on assets. 5. Profit margin. 6. Return on ordinary sharcholders' equity. 7. Price-Earnings ratio. 8. Payout ratio. b. What is a major advantage of using percentages rather than dollar amounts in doing horizontal and vertical analyses? (2 Marka) c. The following data are available for Nichols Corporation. Sale of land Sale of equipment Issuance of ordinary shares Purchase of equipment Payment of cash dividends Purchase of trucks by issuing bonds $400,000 200,000 280,000 120,000 240,000 250,000 What is the amount for Net cash provided (used) by investing activities? (3 Marks)

Answer rating: 100% (QA)

A B Using percentages in doing vertical and horizontal analysis provides a more clear i... View the full answer