1. (a) Construct the DuPont equation for years ended 31 December 2019 and 2018 and explain the

   change in ROE. (6 marks)

2. (b) Calculate the following ratios of TAL for years ended 31 December 2019 and 2018 (calculate to two decimal places):
   (i) Quick ratio
   (ii) Current ratio

   (iii) Day sales outstanding (iv) Fixed assets turnover

   (8 marks)

3. (c) Using ratios from part (b) above, comment briefly on TAL’s liquidity and asset management.

(d) Calculate the dividend per share for year ended 31 December 2019.

(4 marks) (2 marks) 

Transcribed Image Text:

Question 2 (20 marks) Below is the information relating to Travel Accessories Limited ("TAL"): Income Statement for the year to 31 December 2019 ($ in thousands) Sales 280,000 Less: Cost of goods sold 160,000 120,000 18,000 102,000 Cash Accounts receivable Inventory Gross profit Less: Depreciation Earnings before interest and taxes Less: Interest paid Total current assets Net fixed assets Total assets Earnings before taxes Less: Taxes Net income Additional information: Cash sales for the year ended 31 December 2019 was $7,400,000 Sales, cash sales and net income for year ended 31 December 2018 were $250,000,000, $5,600,000 and $50,800,000 respectively. The number of common stock outstanding during the year is 65,200,000. 7.200 94,800 25,600 69.200 Balance Sheets as at 31 December ($ in thousands) 2019 2018 44,000 Accounts payable 76,000 Long-term debt 54,000 Common stock 174,000 Retained earnings 2019 62,000 88,000 88,000 140,000 130,000 40,000 36,000 46,000 88,000 64,000 198,000 132,000 140,000 330.000 314,000 Total liabilities & equity 330,000 2018 60,000 314,000 Question 2 (20 marks) Below is the information relating to Travel Accessories Limited ("TAL"): Income Statement for the year to 31 December 2019 ($ in thousands) Sales 280,000 Less: Cost of goods sold 160,000 120,000 18,000 102,000 Cash Accounts receivable Inventory Gross profit Less: Depreciation Earnings before interest and taxes Less: Interest paid Total current assets Net fixed assets Total assets Earnings before taxes Less: Taxes Net income Additional information: Cash sales for the year ended 31 December 2019 was $7,400,000 Sales, cash sales and net income for year ended 31 December 2018 were $250,000,000, $5,600,000 and $50,800,000 respectively. The number of common stock outstanding during the year is 65,200,000. 7.200 94,800 25,600 69.200 Balance Sheets as at 31 December ($ in thousands) 2019 2018 44,000 Accounts payable 76,000 Long-term debt 54,000 Common stock 174,000 Retained earnings 2019 62,000 88,000 88,000 140,000 130,000 40,000 36,000 46,000 88,000 64,000 198,000 132,000 140,000 330.000 314,000 Total liabilities & equity 330,000 2018 60,000 314,000

Answer rating: 100% (QA)

ANSWER a DuPont equation 2019 ROE Net Income Equity x Sales Assets x Assets Equity ROE 69200 132000 ... View the full answer