Q4. XYZ Limited has made plans for the next year. It is estimated that the company...

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Q4. XYZ Limited has made plans for the next year. It is estimated that the company will employ total assets of €800,000; 50 percent of the assets being financed by borrowed capital at an interest cost of 8 percent per year. The direct costs for the year are estimated at 480,000 and all other operating expenses are estimated at 80,000. The goods will be sold to customers at 150 percent of the direct costs. The tax rate is assumed to be 50 percent. You are required to calculate; (i) net profit margin; (ii) Assets Turnover; (iii) return on owner's equity. (6 marks) Q4. XYZ Limited has made plans for the next year. It is estimated that the company will employ total assets of €800,000; 50 percent of the assets being financed by borrowed capital at an interest cost of 8 percent per year. The direct costs for the year are estimated at 480,000 and all other operating expenses are estimated at 80,000. The goods will be sold to customers at 150 percent of the direct costs. The tax rate is assumed to be 50 percent. You are required to calculate; (i) net profit margin; (ii) Assets Turnover; (iii) return on owner's equity. (6 marks)

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Calculating Ratios for XYZ Limited 1 Net Profit Margin To calculate the net profit margin we need to ... View the full answer