The following is common sizes balance sheet and income statement for a company specialized in fashion...
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The following is common sizes balance sheet and income statement for a company specialized in fashion retailing, the company owns several brand names in clothing and fashion. Balance sheet Assets Cash Marketable securities Accounts receivable Inventories Prepayments Total current assets Fixed assets Other assets (including intangibles) Total Assets Liabilities and Shareholders' equity Accounts payable Short term borrowing Other current liabilities Total current liabilities Long term debt Other noncurrent liabilities Minority interest Total liabilities Common stock Additional paid in capital. Retained earnings Treasury stock Total equity Total liabilities and Shareholders' equity Income Statement Sales Other revenues Cost of goods sold Selling and administrative expenses Interest expenses Income tax expenses Minority interest Net income Common Size Year 4 Year 5 Year 6 Year 7 ROA Profit Margin Assets Turnover Accounts receivable Turnover Inventory Turnover Fixed Assets Turnover collection period inventory period %change in sales 4.1% 2.9% 17.6% 3.8% 0.0% 0.0% 0.0% 5.0% 13.5% 15.2% 0.8% 0.8% 10.3 % 10.2% 14.4% 9.4% 1.4% 1.7% 1.3% 2.9% 28.4% 30.1% 29.9% 26.9% 68.4% 66.0% 62.4% 61.9% 3.2% 3.9% 7.7% 9.2% 100% 100% 100% 100% 3.2% 3.2% 3.0% 3.8% 0.2% 0.3% 0.0% 0.0% 5.6% 5.9% 4.6% 7.4% 9.0% 55.4% 9.4% 7.6% 11.1% 57.4% 53.7% 50.7% 4.3% 4.3% 7.0% 7.0% 0.0% 0.0% 0.5% 68.8% 67.4% 65.8% 2.2% 1.9% 1.6% 1.5% 2.4% 1.7% 30.7% 3.5% 31.2% 32.6% 34.2% 32.1% 34.2% 3.3% 3.4% 100% 100% 100% 0.8% 76.4%. 2.2% 1.8% 43.3% 23.6% 23.6% 100% Year 5 Year 6 Year 7 100% 100% 100% 0.2% 0.3% 0.5% 67.1% 69.5% 66.4% 18.0% 18.7% 21.4% 4.9% 4.9% 5.6% 2.8% 2.8% 4.0% 0.0% 0.3% 0.5% 6.1% 4.0% 3.8% The following are financial ratios for the company. You are required to answer the following questions. Year 5 Year 6 Year 7 2.87% 2.60% 4.13% 3.2% 2.9% 3.1% 0.90 0.88 0.99 6.2 11.5 118.4 6.1 6.0 5.8 1.3 1.4 1.5 58.6 31.7 3.1 59.6 60.9 62.5 7.66% 9.68% 1. Explain the decrease in ROA between year 5 and year 6? And the increase between year 5 and 6? 2. Why did profit margin increase in year 7? 3. What is the indication of the continuous increase in the fixed assets turnover rate? 4. Comment on the accounts receivable turnover rate from year 5 to year 7. The following is common sizes balance sheet and income statement for a company specialized in fashion retailing, the company owns several brand names in clothing and fashion. Balance sheet Assets Cash Marketable securities Accounts receivable Inventories Prepayments Total current assets Fixed assets Other assets (including intangibles) Total Assets Liabilities and Shareholders' equity Accounts payable Short term borrowing Other current liabilities Total current liabilities Long term debt Other noncurrent liabilities Minority interest Total liabilities Common stock Additional paid in capital. Retained earnings Treasury stock Total equity Total liabilities and Shareholders' equity Income Statement Sales Other revenues Cost of goods sold Selling and administrative expenses Interest expenses Income tax expenses Minority interest Net income Common Size Year 4 Year 5 Year 6 Year 7 ROA Profit Margin Assets Turnover Accounts receivable Turnover Inventory Turnover Fixed Assets Turnover collection period inventory period %change in sales 4.1% 2.9% 17.6% 3.8% 0.0% 0.0% 0.0% 5.0% 13.5% 15.2% 0.8% 0.8% 10.3 % 10.2% 14.4% 9.4% 1.4% 1.7% 1.3% 2.9% 28.4% 30.1% 29.9% 26.9% 68.4% 66.0% 62.4% 61.9% 3.2% 3.9% 7.7% 9.2% 100% 100% 100% 100% 3.2% 3.2% 3.0% 3.8% 0.2% 0.3% 0.0% 0.0% 5.6% 5.9% 4.6% 7.4% 9.0% 55.4% 9.4% 7.6% 11.1% 57.4% 53.7% 50.7% 4.3% 4.3% 7.0% 7.0% 0.0% 0.0% 0.5% 68.8% 67.4% 65.8% 2.2% 1.9% 1.6% 1.5% 2.4% 1.7% 30.7% 3.5% 31.2% 32.6% 34.2% 32.1% 34.2% 3.3% 3.4% 100% 100% 100% 0.8% 76.4%. 2.2% 1.8% 43.3% 23.6% 23.6% 100% Year 5 Year 6 Year 7 100% 100% 100% 0.2% 0.3% 0.5% 67.1% 69.5% 66.4% 18.0% 18.7% 21.4% 4.9% 4.9% 5.6% 2.8% 2.8% 4.0% 0.0% 0.3% 0.5% 6.1% 4.0% 3.8% The following are financial ratios for the company. You are required to answer the following questions. Year 5 Year 6 Year 7 2.87% 2.60% 4.13% 3.2% 2.9% 3.1% 0.90 0.88 0.99 6.2 11.5 118.4 6.1 6.0 5.8 1.3 1.4 1.5 58.6 31.7 3.1 59.6 60.9 62.5 7.66% 9.68% 1. Explain the decrease in ROA between year 5 and year 6? And the increase between year 5 and 6? 2. Why did profit margin increase in year 7? 3. What is the indication of the continuous increase in the fixed assets turnover rate? 4. Comment on the accounts receivable turnover rate from year 5 to year 7.
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Answer rating: 100% (QA)
1 The decrease in Return on Assets ROA between Year 5 and 6 is likely a result of a decrease in profitability This can be caused by a decrease in sales an increase in costs or a combination of both Fo... View the full answer
Related Book For
Principles of Accounting
ISBN: 978-0618736614
10th edition
Authors: Belverd Needles, Marian Powers, Susan Crosson
Posted Date:
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