MZ plc, a construction company, has approached its bank for a 5 million long-term loan to...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
MZ plc, a construction company, has approached its bank for a £5 million long-term loan to finance the proposed business expansion plans. You are a credit analyst in the bank and you have been provided the following information from the latest financial statements of the company. Year ended 31 March Return on capital employed Gross profit margin Net profit margin Operating expenses margin Asset turnover Inventory turnover Receivables collection period Payables payment period Cash cycle Current ratio Acid test (liquid) ratio Required: 1. Calculate the missing ratios. (6 marks) 2. Write a report to your manager which: 20X4 ?% 22% 9% ?% 1.5 5 times 46 days 26 days ?% 1.3 0.9 20X5 ?% 23.5% 12.5% ?% 1.2 4 times 35 days 34 days ?% 1.1 0.8 analyses the financial performance and position of the company based on these ratios recommends whether the bank should be willing to lend. (14 marks) MZ plc, a construction company, has approached its bank for a £5 million long-term loan to finance the proposed business expansion plans. You are a credit analyst in the bank and you have been provided the following information from the latest financial statements of the company. Year ended 31 March Return on capital employed Gross profit margin Net profit margin Operating expenses margin Asset turnover Inventory turnover Receivables collection period Payables payment period Cash cycle Current ratio Acid test (liquid) ratio Required: 1. Calculate the missing ratios. (6 marks) 2. Write a report to your manager which: 20X4 ?% 22% 9% ?% 1.5 5 times 46 days 26 days ?% 1.3 0.9 20X5 ?% 23.5% 12.5% ?% 1.2 4 times 35 days 34 days ?% 1.1 0.8 analyses the financial performance and position of the company based on these ratios recommends whether the bank should be willing to lend. (14 marks)
Expert Answer:
Answer rating: 100% (QA)
Calculation of missing ratios Operating expenses margin 100 Gross profit margin Net profit margin Operating expenses margin for 20X4 100 22 9 69 Operating expenses margin for 20X5 100 235 125 64 Cash ... View the full answer
Related Book For
Managerial economics
ISBN: 978-1118041581
7th edition
Authors: william f. samuelson stephen g. marks
Posted Date:
Students also viewed these accounting questions
-
N balls labeled 1 through N are placed in Box 1 while a Box 2 is initially empty. At each time instant, one of the N balls is chosen (with equally probability) and moved to the other box. Let X [k]...
-
N sources of current with different emf's are connected as shown in Fig. 3.40. The emf's of the sources are proportional to their internal resistances, i.e. ε = aR, where a is an assigned...
-
N = the set of natural numbers, W = the set of whole numbers, Z = the set of integers, Q = the set of rational numbers, I = the set of irrational numbers, and R = the set of real numbers. Classify...
-
Compensation survey data collected in July 2018 shows the average annual salary for Accountant II is $62,300.00 (rounded). With an aging rate of +2.3%, calculate the market value for an Accountant II...
-
Shannon, Inc. changed from the average cost to the FIFO cost flow assumption in 2010. The increase in the prior years income before taxes is 1,200,000. The tax rate is 40%. Prepare Shannons 2010...
-
1. The separate incomes of Pop Corporation and Son Corporation, a 100 percent-owned subsidiary of Pop, for 2017 are $2,000 and $1,000, respectively. Pop sells all of its output to Son at 150 percent...
-
Sonic Drive-Ins borrowed money by issuing \(\$ 1,000,000\) of \(6 \%\) bonds payable at 96.5 . 1. How much cash did Sonic receive when it issued the bonds payable? 2. How much must Sonic pay back at...
-
Explain how a sales order, a production order, a materials requisition form, and a labor time ticket are involved in producing and costing products?
-
Channing Tate sells his farm, Magic Meander, to Chris Hemsworth for R 5000 000. Chris takes occupation of the farm. Despite a letter of demand, Chris fails to make any payments for the purchase price...
-
Monthly sales are independent normal random variables with mean 100 and standard deviation 5. a. Find the probability that exactly of the next months have sales greater than 100. b. Find the...
-
The students in Ms. Caven's class have a large poster showing amillion dots. Now, the students would really like to see a billionof something. Think of at least two different ways that you...
-
Evalute the following expression for x = 1 9 x + 1 6 5 x
-
Gold Nest Company of Guandong, China, makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their...
-
For the Home Loan Bank of Chicago What kind of organizational structure does the organization use? What other structures discussed in the chapter might allow the organization to operate more...
-
The solid shaft of radius r = 0.5 inches and shear modulus G = 10,000ksi is subjected to the torques shown, and T = 10,000lb - in. At the surface of the shaft, the angle between the "line before...
-
the value of term 1 3 in an arithmetic series is 1 4 7 and the sum of the first 1 3 terms is 1 2 8 7 . What is the value of the first term? and what is the common difference?
-
The Admin wanted to check PVST setting only for VLAN 1 on the switch. He/She typed the following command and the command received an error. Re-type the right command in the blank. Note: Only type the...
-
Identify the tax issues or problems suggested by the following situations. State each issue as a question. Jennifer did not file a tax return for 2007 because she honestly believed that no tax was...
-
As the name suggests, a lagging indicator is an economic variable whose movements occur after movements in the overall economy. a. A number of employment measures are lagging indicators. Consider the...
-
Firm B is considering whether to pursue an R&D effort to develop a powerful new microchip. One concern with the design is that the chip might generate too much heat operating at high speeds. Indeed,...
-
A 200-pound steer can be sustained on a diet calling for various proportions of grass and grain. These combinations are shown in the table. Pounds of Grass Pounds of Grain 50 ..........80 56...
-
How do you allocate requirements?
-
How do you flow down requirements?
-
What is requirements flow down?
Study smarter with the SolutionInn App