1. Assume that you are the Chief Executive Officer of the XYZ Company Ltd an importer,...

 

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1. Assume that you are the Chief Executive Officer of the XYZ Company Ltd an importer, manufacturer and distributor of electrical equipments in Tanzania. The company sells its goods on terms of 2/10, net 30 and extracts from its financial statements over the last 3 years are presented in the table below (figures in Tshs million): 2017 2018 2019 30 20 S 200 200 290 400 480 600 800 800 800 1430 1.580 1.695 230 320 380 200 210 225 Bank loan, short term 100 100 140 Long-term debe 300 300 100 100 100 100 500 550 550 1.430 1.580 1.695 Cash Accounts receivable Inventory Net Fixed Assets Accounts payable Accruals Common stock Retained Earnings Sales 4,000 4,300 3,800 Cost of goods sold 3.2003,6003,300 Net Profit 300 200 100 Assume further that of late you have become concerned about the performance of your company in lieu of the current competitive markets resulting out of the many companies that have mushroomed specializing in the same business. In order to position your company adequately and make appropriate recommendations to the Board you have asked the company's Accountant to give you any valuable information there might be regarding the company's performance. He has responded by computing and submitting the following ratios to you. 2017 2018 2019 1.19 1.25 1.20 0.43 0.46 0.40 18 22 27 NA 8.2 6.1 1.38 1.40 1.61 Long-term debt to total capitalization 0.33 0.32 0.32 Kiross profit margin 0.200 0.163 0.132 Net profit margin 0.075 0.047 0.026 Asset turnover 2.80 2.76 2.24 Return to assets 0.21 0.13 0.06 Current ratio Acid-test ratio Average collection period Inventory turnover Total debt to net worth 1. Assume that you are the Chief Executive Officer of the XYZ Company Ltd an importer, manufacturer and distributor of electrical equipments in Tanzania. The company sells its goods on terms of 2/10, net 30 and extracts from its financial statements over the last 3 years are presented in the table below (figures in Tshs million): 2017 2018 2019 30 20 S 200 200 290 400 480 600 800 800 800 1430 1.580 1.695 230 320 380 200 210 225 Bank loan, short term 100 100 140 Long-term debe 300 300 100 100 100 100 500 550 550 1.430 1.580 1.695 Cash Accounts receivable Inventory Net Fixed Assets Accounts payable Accruals Common stock Retained Earnings Sales 4,000 4,300 3,800 Cost of goods sold 3.2003,6003,300 Net Profit 300 200 100 Assume further that of late you have become concerned about the performance of your company in lieu of the current competitive markets resulting out of the many companies that have mushroomed specializing in the same business. In order to position your company adequately and make appropriate recommendations to the Board you have asked the company's Accountant to give you any valuable information there might be regarding the company's performance. He has responded by computing and submitting the following ratios to you. 2017 2018 2019 1.19 1.25 1.20 0.43 0.46 0.40 18 22 27 NA 8.2 6.1 1.38 1.40 1.61 Long-term debt to total capitalization 0.33 0.32 0.32 Kiross profit margin 0.200 0.163 0.132 Net profit margin 0.075 0.047 0.026 Asset turnover 2.80 2.76 2.24 Return to assets 0.21 0.13 0.06 Current ratio Acid-test ratio Average collection period Inventory turnover Total debt to net worth

Answer rating: 100% (QA)

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