1. Togo Co. has the following financial statements. Togo Co. Income Statement for the Year Sales...

Transcribed Image Text:

1. Togo Co. has the following financial statements. Togo Co. Income Statement for the Year Sales revenue Less: Cost of goods sold Gross profit Less: Operating expenses Depreciation Operating income Less: Interest expense Income taxes Net income Current assets: Cash - Togo Co. Balance Sheet at the End of the Year Accounts receivable Inventory Long-term assets: At cost Accumulated depreciation Total assets Liabilities & Shareholders' Equity Current liabilities: Trade accounts payable Other current liabilities Long-term liabilities: Mortgage Total liabilities Equity: Common shares Total liabilitics & Equity $3,700,000 500,000 Retained earnings $ 100,000 800,000 $5,000,000 3.000.000 $2,250,000 750.000 $18,000,000 12,000,000 $ 6,000,000 $1,000,000 3,600,000 2.400.000 $ 7,000,000 $1,500,000 3.000.000 4,200.000 $ 1,800,000 900,000 900.000 2.000.000 $9.000.000 $ 3,000,000 1.500.000 $ 4,500,000 4.500,000 $9.000.000 Net income for the year Dividends Add: Retained earnings brought forwardi Retained earnings carried forward (a) Calculate the following ration: Required. Use the information in the financial statements to answer the following questions: (c) Calculate the following ratios: (1) return on sales ratio (as a %) (ii) return on assets ratio (as a %) (ii) return on equity ratio (as a %) (b) Based on these ratios, comment on the profitability of the company. (e) Calculate the following ration: (1) the current ratio (ii) the quick ratio (d) Based on these ratios, comment on the liquidity of the company. (i) the gross profit to sales ratio (as a %) (ii) $ S 600,000 2,400,000 $3,0MX),(MX) 900,000 300,000 the ratio of operating expenses to sales (as a %) (ii) the operating income to sales ratio (as a %) (i) the receivables turnover ratio (ii) the receivables collection period (in) the inventory turnover ratio (iv) the days' sales in inventory (v) the total asset turnover ratio (iv) the net income to sales ratio (as a %) (v) the interest cover ratio (vi) the dividend cover ratio (1) Based on these ratios, comment on the profitability of the company. (g) Calculate the following: (ii) the carnings per share (iii) the price to carnings ratio (h) Based on these ratios, comment on the efficiency of the company. (1) Assume Togo Co/'s share price is $100 per share, and there are 100,000 shares in issue. Calculate the following: (i) the dividend payout ratio () Based on these ratios, comment on the desirability of these shares as an investment. 1. Togo Co. has the following financial statements. Togo Co. Income Statement for the Year Sales revenue Less: Cost of goods sold Gross profit Less: Operating expenses Depreciation Operating income Less: Interest expense Income taxes Net income Current assets: Cash - Togo Co. Balance Sheet at the End of the Year Accounts receivable Inventory Long-term assets: At cost Accumulated depreciation Total assets Liabilities & Shareholders' Equity Current liabilities: Trade accounts payable Other current liabilities Long-term liabilities: Mortgage Total liabilities Equity: Common shares Total liabilitics & Equity $3,700,000 500,000 Retained earnings $ 100,000 800,000 $5,000,000 3.000.000 $2,250,000 750.000 $18,000,000 12,000,000 $ 6,000,000 $1,000,000 3,600,000 2.400.000 $ 7,000,000 $1,500,000 3.000.000 4,200.000 $ 1,800,000 900,000 900.000 2.000.000 $9.000.000 $ 3,000,000 1.500.000 $ 4,500,000 4.500,000 $9.000.000 Net income for the year Dividends Add: Retained earnings brought forwardi Retained earnings carried forward (a) Calculate the following ration: Required. Use the information in the financial statements to answer the following questions: (c) Calculate the following ratios: (1) return on sales ratio (as a %) (ii) return on assets ratio (as a %) (ii) return on equity ratio (as a %) (b) Based on these ratios, comment on the profitability of the company. (e) Calculate the following ration: (1) the current ratio (ii) the quick ratio (d) Based on these ratios, comment on the liquidity of the company. (i) the gross profit to sales ratio (as a %) (ii) $ S 600,000 2,400,000 $3,0MX),(MX) 900,000 300,000 the ratio of operating expenses to sales (as a %) (ii) the operating income to sales ratio (as a %) (i) the receivables turnover ratio (ii) the receivables collection period (in) the inventory turnover ratio (iv) the days' sales in inventory (v) the total asset turnover ratio (iv) the net income to sales ratio (as a %) (v) the interest cover ratio (vi) the dividend cover ratio (1) Based on these ratios, comment on the profitability of the company. (g) Calculate the following: (ii) the carnings per share (iii) the price to carnings ratio (h) Based on these ratios, comment on the efficiency of the company. (1) Assume Togo Co/'s share price is $100 per share, and there are 100,000 shares in issue. Calculate the following: (i) the dividend payout ratio () Based on these ratios, comment on the desirability of these shares as an investment.

Answer rating: 100% (QA)

SOLUTION a Ratios 1 Return on sales ratio Net income Sales revenue 900000 18000000 5 ii Return on assets ratio Net income Total assets 900000 9000000 10 iii Return on equity ratio Net income Sharehold... View the full answer