Using the full list of ratios and formulas as outlined on the ratio analysis worksheet, prepare a
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Using the full list of ratios and formulas as outlined on the ratio analysis worksheet, prepare a summary comparing and contrasting the asset management, investment performance and general liquidity, solvency and profitability of BOTH companies. The comparative discussion for each ratio category should span one to two well developed paragraphs.
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LIQUIDITY RATIOS RATIO Current Ratio Acid Test Ratio SOLVENCY RATIOS Total Asset to Total Liabilities Debt to Common Equity Gearing Ratio PROFITABILITY RATIOS Net Profit Margin Return on Assets Return on Capital Employed Return on Shareholders' Equity Stock Turnover Period Debtors Turnover Debtors Turnover Period ASSET MANAGEMENT RATIOS Stock Turnover Creditors Turnover Creditors Turnover Period FORMULA Current Assets Current Liabilities (Current Assets - Closing Stock) = Current Liabilities INVESTMENT RATIOS Price Earnings Ratio Times Interest Earned Total Assets Total Liabilities (Non-Current Liabilities + Preference Shares) Common Equity (Non-Current Liabilities + Preference Shares) Capital Employed x 100 Profit after Tax = Sales x 100 Profit before Interest and Tax = Total Assets x 100 Profit before Interest and Tax +÷ Capital Employed x 100 (Profit after Tax - Preference Dividends) + Common Equity x 100 Cost of Sales Average Stock 365 x Average Stock Cost of Sales Sales Debtors 365 x Debtors Sales. Purchases + Creditors 365 x Creditors + Purchases Market Price per Share Earnings per Share Profit before Interest and Tax = Interest Expense Note: Common Equity= Capital and Reserves - Preference Shares Capital Employed = Capital and Reserves + Non-Current Liabilities Average Stock = (Opening Stock + Closing Stock) + 2 EXPRESSED GOOD X:1 HIGH X:1 X:1 X:1 X% X% X% X% X% X TIMES X DAYS X TIMES X DAYS X TIMES X DAYS X TIMES X TIMES HIGH HIGH LOW LOW HIGH HIGH HIGH HIGH HIGH LOW HIGH LOW HIGH LOW HIGH HIGH WORKINGS ANSWER LIQUIDITY RATIOS RATIO Current Ratio Acid Test Ratio SOLVENCY RATIOS Total Asset to Total Liabilities Debt to Common Equity Gearing Ratio PROFITABILITY RATIOS Net Profit Margin Return on Assets Return on Capital Employed Return on Shareholders' Equity Stock Turnover Period Debtors Turnover Debtors Turnover Period ASSET MANAGEMENT RATIOS Stock Turnover Creditors Turnover Creditors Turnover Period FORMULA Current Assets Current Liabilities (Current Assets - Closing Stock) = Current Liabilities INVESTMENT RATIOS Price Earnings Ratio Times Interest Earned Total Assets Total Liabilities (Non-Current Liabilities + Preference Shares) Common Equity (Non-Current Liabilities + Preference Shares) Capital Employed x 100 Profit after Tax = Sales x 100 Profit before Interest and Tax = Total Assets x 100 Profit before Interest and Tax +÷ Capital Employed x 100 (Profit after Tax - Preference Dividends) + Common Equity x 100 Cost of Sales Average Stock 365 x Average Stock Cost of Sales Sales Debtors 365 x Debtors Sales. Purchases + Creditors 365 x Creditors + Purchases Market Price per Share Earnings per Share Profit before Interest and Tax = Interest Expense Note: Common Equity= Capital and Reserves - Preference Shares Capital Employed = Capital and Reserves + Non-Current Liabilities Average Stock = (Opening Stock + Closing Stock) + 2 EXPRESSED GOOD X:1 HIGH X:1 X:1 X:1 X% X% X% X% X% X TIMES X DAYS X TIMES X DAYS X TIMES X DAYS X TIMES X TIMES HIGH HIGH LOW LOW HIGH HIGH HIGH HIGH HIGH LOW HIGH LOW HIGH LOW HIGH HIGH WORKINGS ANSWER
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Company A and Company B can be compared and contrasted based on their asset management investment performance and general liquidity solvency and profitability using the provided ratios In terms of liq... View the full answer
Related Book For
Financial and Managerial Accounting
ISBN: 978-1133940593
10th edition
Authors: Belverd E. Needles, Marian Powers, Susan V. Crosson
Posted Date:
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