The following data which are based on the research conducted by Deakin (1972) present the means...

   

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The following data which are based on the research conducted by Deakin (1972) present the means of several financial statement items for a sample of 32 failed companies and a matched sample of 32 non-failed companies. A company was defined as failed if it experienced bankruptcy, insolvency, or was otherwise liquidated for the benefit of creditors during a five-year period. Each failed company was matched with a non-failed company on the basis of industry classification, calendar year and asset size as of five years prior to failure. The data present mean financial statement items for each of the five years prior to the bankruptcy, insolvency or liquidation. Mean Financial Items of Failed and Non-Failed Companies (R'000) PANEL A. FAILED COMPANIES Financial item 5 Years before failure 4 3 2 1 Statement of financial position data 1. Cash and marketable securities 2. Accounts receivable 753 1 020 730 511 329 1 845 3 164 3 563 2 359 2 090 3. Inventories 2 827 6 064 7 390 2 525 2 378 4. Other assets 3 937 7 018 8 332 5 107 5 229 5. Total assets 9 362 17 266 20 015 10 502 10 026 6. Current liabilities 3 780 4 820 8 092 6 102 6 860 7. Other liabilities 2 149 8 617 9 784 3 537 3 408 8. Equity 3 433 3 829 2 139 863 -242 9. Liabilities and equity 9 362 17 266 20 015 10 502 10 026 Statement of comprehensive income and cash flow data 10. Sales 16 508 15 425 18 259 16 656 16 938 11. Net income 65 -29 -664 -858 -1 309 12. Cash flow 145 308 -244 -518 -909 8 PANEL B. NON-FAILED COMPANIES Financial item 5 Years before failure 4 3 2 1 Statement of financial position data 1. Cash and marketable securities 981 1 086 1 107 1 304 1 365 2. Accounts receivable 1 716 1 730 1 837 2 146 2 358 3. Inventories 3 022 3 000 3 006 3 479 3 974 4. Other assets 5. Total assets 6. Current liabilities 3 678 3 995 4 225 5 243 5565 9 397 9 811 10 175 12 172 13 262 2 023 2 251 2 370 2 920 3 305 7. Other liabilities 2169 2 432 2 479 2 826 3 800 8. Equity 5 205 5 128 5 326 6426 6 157 9. Liabilities and equity 9 397 9 811 10 175 12 172 13 262 Statement of comprehensive income and cash flow data 10. Sales 16 989 16 395 17 610 11. Net income 206 46 12. Cash flow 523 381 211 577 20 445 426 22 426 480 865 941 REQUIRED: 1) Use the data in Panel A and Panel B to present the following ratios in graphical format for the failed and non-failed companies: Current ratio " Acid test/Quick ratio Debt ratio Net profit percentage Total asset turnover ratio 2) Briefly discuss which financial ratios exhibit the most differential behaviour for the failed and non-failed companies in the five-year period prior to failure? Select any company of your choice listed on the Johannesburg Stock Exchange. Using the company's financial statements (covering five financial periods) you are required to: 1) Calculate the following ratios (for the financial years ending 2019-2023: . Current ratio Acid test/Quick ratio Debt ratio Net profit percentage Total asset turnover ratio 2) Use a graphical approach to compare the ratios of your selected company to those in Part A above (failed and non-failed companies). Briefly discuss whether the ratios for your selected company resemble The following data which are based on the research conducted by Deakin (1972) present the means of several financial statement items for a sample of 32 failed companies and a matched sample of 32 non-failed companies. A company was defined as failed if it experienced bankruptcy, insolvency, or was otherwise liquidated for the benefit of creditors during a five-year period. Each failed company was matched with a non-failed company on the basis of industry classification, calendar year and asset size as of five years prior to failure. The data present mean financial statement items for each of the five years prior to the bankruptcy, insolvency or liquidation. Mean Financial Items of Failed and Non-Failed Companies (R'000) PANEL A. FAILED COMPANIES Financial item 5 Years before failure 4 3 2 1 Statement of financial position data 1. Cash and marketable securities 2. Accounts receivable 753 1 020 730 511 329 1 845 3 164 3 563 2 359 2 090 3. Inventories 2 827 6 064 7 390 2 525 2 378 4. Other assets 3 937 7 018 8 332 5 107 5 229 5. Total assets 9 362 17 266 20 015 10 502 10 026 6. Current liabilities 3 780 4 820 8 092 6 102 6 860 7. Other liabilities 2 149 8 617 9 784 3 537 3 408 8. Equity 3 433 3 829 2 139 863 -242 9. Liabilities and equity 9 362 17 266 20 015 10 502 10 026 Statement of comprehensive income and cash flow data 10. Sales 16 508 15 425 18 259 16 656 16 938 11. Net income 65 -29 -664 -858 -1 309 12. Cash flow 145 308 -244 -518 -909 8 PANEL B. NON-FAILED COMPANIES Financial item 5 Years before failure 4 3 2 1 Statement of financial position data 1. Cash and marketable securities 981 1 086 1 107 1 304 1 365 2. Accounts receivable 1 716 1 730 1 837 2 146 2 358 3. Inventories 3 022 3 000 3 006 3 479 3 974 4. Other assets 5. Total assets 6. Current liabilities 3 678 3 995 4 225 5 243 5565 9 397 9 811 10 175 12 172 13 262 2 023 2 251 2 370 2 920 3 305 7. Other liabilities 2169 2 432 2 479 2 826 3 800 8. Equity 5 205 5 128 5 326 6426 6 157 9. Liabilities and equity 9 397 9 811 10 175 12 172 13 262 Statement of comprehensive income and cash flow data 10. Sales 16 989 16 395 17 610 11. Net income 206 46 12. Cash flow 523 381 211 577 20 445 426 22 426 480 865 941 REQUIRED: 1) Use the data in Panel A and Panel B to present the following ratios in graphical format for the failed and non-failed companies: Current ratio " Acid test/Quick ratio Debt ratio Net profit percentage Total asset turnover ratio 2) Briefly discuss which financial ratios exhibit the most differential behaviour for the failed and non-failed companies in the five-year period prior to failure? Select any company of your choice listed on the Johannesburg Stock Exchange. Using the company's financial statements (covering five financial periods) you are required to: 1) Calculate the following ratios (for the financial years ending 2019-2023: . Current ratio Acid test/Quick ratio Debt ratio Net profit percentage Total asset turnover ratio 2) Use a graphical approach to compare the ratios of your selected company to those in Part A above (failed and non-failed companies). Briefly discuss whether the ratios for your selected company resemble