You are an industry analyst working for a bank. The financial information provided below is for...

  

Transcribed Image Text:

You are an industry analyst working for a bank. The financial information provided below is for the two companies operating in same industry. All sales in both companies are on credit. Statement of profit or loss and other comprehensive income for year ended 30 June 2020 Tango (Pty) Ltd Cash (Pty) Ltd R R 8 200 000 Turnover(sales) Less: Variable cost Cost of sales Selling Contribution Less: Total fixed cost (excl. interest) Administration Production Selling EBIT Interest expense Earning before tax (EBT) Taxation Profit after tax (EAIT) Dividends Profit for the year (6 (6 230 000) (200 000) 1 770 000 (840 000) 430 000) (180 000) (600 000) (60 000) 930 000 (100 000) 830 000 (249 000) 581 000 (174 000) R 407 000 6 300 000 (4 420 000) (4 160 000) (260 000) 1 880 000 (690 000) (140 000) (510 000) (40 000) 1 190 000 (90 000) 1 100 000 (330 000) 770 000 (288 000) R 482 000 Statement of financial position at 30 June 2020 Tango (Pty) ASSETS Non-current assets Property, plant and equipment carrying amount Current assets: Inventory Trade and other receivables Cash and cash equivalents Total current assets EQUITY AND LIABILITIES Equity Share capital Retained earnings Non-current liabilities Long-term loan Current liabilities Bank overdraft Trade and other payables Other current liability Total equity and liabilities Ltd R 6 200 000 2 760 000 1 340 000 1 360 000 60 000 8 960 000 6 600 000 3 850 000 2 750 000 600 000 1 760 000 230 000 1 070 000 460 000 8 960 000 Cash (Pty) Ltd R 8 630 000 2 970 000 1 060 000 1 820 000 90 000 11 600 000 8 700 000 5 150 000 3 550 000 700 000 2 200 000 220 000 1.460 000 520 000 11 600 000 You are required Calculate the following ratios for both Tango (Pty) and Cash (Pty), do not use average ratios: 1.1 Debt/Equity ratio 1.2 Current ratio 1.3 Acid test ratio 1.4 Inventory turnover 1.5 Debtor collection period Gross margin on sales Return On Equity ROE using Dupont analysis 1.6 1.7 (2) (2) (2) (4) (4) (4) (7) You are an industry analyst working for a bank. The financial information provided below is for the two companies operating in same industry. All sales in both companies are on credit. Statement of profit or loss and other comprehensive income for year ended 30 June 2020 Tango (Pty) Ltd Cash (Pty) Ltd R R 8 200 000 Turnover(sales) Less: Variable cost Cost of sales Selling Contribution Less: Total fixed cost (excl. interest) Administration Production Selling EBIT Interest expense Earning before tax (EBT) Taxation Profit after tax (EAIT) Dividends Profit for the year (6 (6 230 000) (200 000) 1 770 000 (840 000) 430 000) (180 000) (600 000) (60 000) 930 000 (100 000) 830 000 (249 000) 581 000 (174 000) R 407 000 6 300 000 (4 420 000) (4 160 000) (260 000) 1 880 000 (690 000) (140 000) (510 000) (40 000) 1 190 000 (90 000) 1 100 000 (330 000) 770 000 (288 000) R 482 000 Statement of financial position at 30 June 2020 Tango (Pty) ASSETS Non-current assets Property, plant and equipment carrying amount Current assets: Inventory Trade and other receivables Cash and cash equivalents Total current assets EQUITY AND LIABILITIES Equity Share capital Retained earnings Non-current liabilities Long-term loan Current liabilities Bank overdraft Trade and other payables Other current liability Total equity and liabilities Ltd R 6 200 000 2 760 000 1 340 000 1 360 000 60 000 8 960 000 6 600 000 3 850 000 2 750 000 600 000 1 760 000 230 000 1 070 000 460 000 8 960 000 Cash (Pty) Ltd R 8 630 000 2 970 000 1 060 000 1 820 000 90 000 11 600 000 8 700 000 5 150 000 3 550 000 700 000 2 200 000 220 000 1.460 000 520 000 11 600 000 You are required Calculate the following ratios for both Tango (Pty) and Cash (Pty), do not use average ratios: 1.1 Debt/Equity ratio 1.2 Current ratio 1.3 Acid test ratio 1.4 Inventory turnover 1.5 Debtor collection period Gross margin on sales Return On Equity ROE using Dupont analysis 1.6 1.7 (2) (2) (2) (4) (4) (4) (7) You are an industry analyst working for a bank. The financial information provided below is for the two companies operating in same industry. All sales in both companies are on credit. Statement of profit or loss and other comprehensive income for year ended 30 June 2020 Tango (Pty) Ltd Cash (Pty) Ltd R R 8 200 000 Turnover(sales) Less: Variable cost Cost of sales Selling Contribution Less: Total fixed cost (excl. interest) Administration Production Selling EBIT Interest expense Earning before tax (EBT) Taxation Profit after tax (EAIT) Dividends Profit for the year (6 (6 230 000) (200 000) 1 770 000 (840 000) 430 000) (180 000) (600 000) (60 000) 930 000 (100 000) 830 000 (249 000) 581 000 (174 000) R 407 000 6 300 000 (4 420 000) (4 160 000) (260 000) 1 880 000 (690 000) (140 000) (510 000) (40 000) 1 190 000 (90 000) 1 100 000 (330 000) 770 000 (288 000) R 482 000 Statement of financial position at 30 June 2020 Tango (Pty) ASSETS Non-current assets Property, plant and equipment carrying amount Current assets: Inventory Trade and other receivables Cash and cash equivalents Total current assets EQUITY AND LIABILITIES Equity Share capital Retained earnings Non-current liabilities Long-term loan Current liabilities Bank overdraft Trade and other payables Other current liability Total equity and liabilities Ltd R 6 200 000 2 760 000 1 340 000 1 360 000 60 000 8 960 000 6 600 000 3 850 000 2 750 000 600 000 1 760 000 230 000 1 070 000 460 000 8 960 000 Cash (Pty) Ltd R 8 630 000 2 970 000 1 060 000 1 820 000 90 000 11 600 000 8 700 000 5 150 000 3 550 000 700 000 2 200 000 220 000 1.460 000 520 000 11 600 000 You are required Calculate the following ratios for both Tango (Pty) and Cash (Pty), do not use average ratios: 1.1 Debt/Equity ratio 1.2 Current ratio 1.3 Acid test ratio 1.4 Inventory turnover 1.5 Debtor collection period Gross margin on sales Return On Equity ROE using Dupont analysis 1.6 1.7 (2) (2) (2) (4) (4) (4) (7) You are an industry analyst working for a bank. The financial information provided below is for the two companies operating in same industry. All sales in both companies are on credit. Statement of profit or loss and other comprehensive income for year ended 30 June 2020 Tango (Pty) Ltd Cash (Pty) Ltd R R 8 200 000 Turnover(sales) Less: Variable cost Cost of sales Selling Contribution Less: Total fixed cost (excl. interest) Administration Production Selling EBIT Interest expense Earning before tax (EBT) Taxation Profit after tax (EAIT) Dividends Profit for the year (6 (6 230 000) (200 000) 1 770 000 (840 000) 430 000) (180 000) (600 000) (60 000) 930 000 (100 000) 830 000 (249 000) 581 000 (174 000) R 407 000 6 300 000 (4 420 000) (4 160 000) (260 000) 1 880 000 (690 000) (140 000) (510 000) (40 000) 1 190 000 (90 000) 1 100 000 (330 000) 770 000 (288 000) R 482 000 Statement of financial position at 30 June 2020 Tango (Pty) ASSETS Non-current assets Property, plant and equipment carrying amount Current assets: Inventory Trade and other receivables Cash and cash equivalents Total current assets EQUITY AND LIABILITIES Equity Share capital Retained earnings Non-current liabilities Long-term loan Current liabilities Bank overdraft Trade and other payables Other current liability Total equity and liabilities Ltd R 6 200 000 2 760 000 1 340 000 1 360 000 60 000 8 960 000 6 600 000 3 850 000 2 750 000 600 000 1 760 000 230 000 1 070 000 460 000 8 960 000 Cash (Pty) Ltd R 8 630 000 2 970 000 1 060 000 1 820 000 90 000 11 600 000 8 700 000 5 150 000 3 550 000 700 000 2 200 000 220 000 1.460 000 520 000 11 600 000 You are required Calculate the following ratios for both Tango (Pty) and Cash (Pty), do not use average ratios: 1.1 Debt/Equity ratio 1.2 Current ratio 1.3 Acid test ratio 1.4 Inventory turnover 1.5 Debtor collection period Gross margin on sales Return On Equity ROE using Dupont analysis 1.6 1.7 (2) (2) (2) (4) (4) (4) (7)

Answer rating: 100% (QA)

11 Debt Equity Ratio The formula for Debt Equity Ratio is Long term Debt Equity Substituting the values in above formula one gets Debt Equity Ratio fo... View the full answer