Question: The financial statements for Wiley Ltd are presented below Statement of profit or loss and other comprehensive income for Wiley Ltd for the year ending
The financial statements for Wiley Ltd are presented below
Statement of profit or loss and other comprehensive income for Wiley Ltd for the year ending 30 June 2019
$
$
Sales (credit)
250 000
Cost of sales
- Inventory01 July 2018
(25 000)
- Purchases
(152 500)
- Inventory30 June 2019
27 500
(150 000)
Gross profit
100 000
Selling and administrative expenses
(20 000)
Depreciation
(40 000)
Profit before tax
40 000
Income tax expense (20 per cent)
(10 000)
Profit after tax
30 000
Other comprehensive income
-
Total comprehensive income
30 000
Statement of financial position for Wiley Ltd as at 30 June 2019
($)
Cash
34 000
Accounts receivable
46 000
Inventory (cost)
27 500
Plant and equipment
125 000
lessAccumulateddepreciation
(30 000)
Land
50 000
Totalassets
202 500
Sharecapital
150 000
Retained earnings
30 000
Current liabilities
Accounts payable
Dividends payable
12 500
10 000
Non-current liabilities
Long-term bonds
50 000
Total shareholders' equity and liabilities
202 500
Required:
Calculate: EBIT Margin Ratio, Asset Turnover Ratio and Return on investment (using totalassetsas investment and profit after tax for income) and comment on the profitability of the company against the industry averages which are EBIT margin=25%, Asset Turnover=2.5 and Return on investment=20%.
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