You have been presented with the following data related to two companies that are of the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You have been presented with the following data related to two companies that are of the same size and operating in the same business sector: Co. A Co. B Data from The Income Statement $ millions $ millions REVENUE 3,800 3,300 OPERATING PROFIT 800 800 NET PROFIT AFTER TAX 500 350 NET INTEREST COST 60 250 DIVIDENDS FOR THE YEAR 2001 200 Co. A Co. B Data from The Balance Sheet TOTAL ASSETS $ millions $ millions 6,000 6,000 TOTAL CURRENT ASSETS 3,000 3,500 ALL INVENTORIES 1,000 1,500 ALL ACCOUNTS RECEIVABLE 1,000 1,500 | CASH & CASH EQUIVALENTS 1,000 500 TOTAL CURRENT LIABILITIES 2,500 4,000 TOTAL LIABILITIES 3,500 4,500 TOTAL EQUITY 2,500 1,500 TOTAL BORROWINGS 1,000 2,000 CONTINUE CONFIDENTIAL January 2024/BBA2234/Set A Compare the financial performance of the two companies above in the following areas, using the following ratios: Clues for the ratios are provided in brackets 1. Net Profit margin (NPAT/R) 2. Asset Utilisation Ratio (R/TA) 3. Net Return on Investment (NPAT/TA) 4. Cash Ratio (CCE/CL) 5. Current Ratio (CA/CL) 6. Accounts Receivable Ratio (AR/CL) 7. Gearing (TB/EQ) 8. Interest Cover (OP/Int) USE THIS TEMPLATE AS A GUIDE FOR YOUR ANSWER: PROFITABILITY 1 Net Profit Margin 2 Asset Utilisation Ratio 3 Net Return on Investment LIQUIDITY 1 Cash Ratio 2 Current Ratio 3 Accounts Receivable Ratio BORROWING MANAGEMENT 1 Gearing 2 Interest Cover The CO. A CO. B better ratio is for Company: (1mark for each ratio calculated correctly = 16*1 mark = 16 marks) (9 marks for correctly identifying which company performs better) [Total 25 marks] You have been presented with the following data related to two companies that are of the same size and operating in the same business sector: Co. A Co. B Data from The Income Statement $ millions $ millions REVENUE 3,800 3,300 OPERATING PROFIT 800 800 NET PROFIT AFTER TAX 500 350 NET INTEREST COST 60 250 DIVIDENDS FOR THE YEAR 2001 200 Co. A Co. B Data from The Balance Sheet TOTAL ASSETS $ millions $ millions 6,000 6,000 TOTAL CURRENT ASSETS 3,000 3,500 ALL INVENTORIES 1,000 1,500 ALL ACCOUNTS RECEIVABLE 1,000 1,500 | CASH & CASH EQUIVALENTS 1,000 500 TOTAL CURRENT LIABILITIES 2,500 4,000 TOTAL LIABILITIES 3,500 4,500 TOTAL EQUITY 2,500 1,500 TOTAL BORROWINGS 1,000 2,000 CONTINUE CONFIDENTIAL January 2024/BBA2234/Set A Compare the financial performance of the two companies above in the following areas, using the following ratios: Clues for the ratios are provided in brackets 1. Net Profit margin (NPAT/R) 2. Asset Utilisation Ratio (R/TA) 3. Net Return on Investment (NPAT/TA) 4. Cash Ratio (CCE/CL) 5. Current Ratio (CA/CL) 6. Accounts Receivable Ratio (AR/CL) 7. Gearing (TB/EQ) 8. Interest Cover (OP/Int) USE THIS TEMPLATE AS A GUIDE FOR YOUR ANSWER: PROFITABILITY 1 Net Profit Margin 2 Asset Utilisation Ratio 3 Net Return on Investment LIQUIDITY 1 Cash Ratio 2 Current Ratio 3 Accounts Receivable Ratio BORROWING MANAGEMENT 1 Gearing 2 Interest Cover The CO. A CO. B better ratio is for Company: (1mark for each ratio calculated correctly = 16*1 mark = 16 marks) (9 marks for correctly identifying which company performs better) [Total 25 marks]
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
Using the following graphs, match the market situation with the correct graph. Price 0 E1 E Q Q Quantity Graph C S 52 Price P 0 Which graph shows an increase in supply? Which graph shows a decrease...
-
What is the difference between book value per share of common stock and market value per share? Why does this disparity occur?
-
For the sticking example given in Fig. 6.10, drive an expression for the lateral force F required to slide the work piece to the right while the work piece is being compressed between flat dies.
-
Use the information in Exercise E6-27 except assume that BeGone uses FIFO process costing. Prepare a schedule showing the BeGone August computation of FIFO equivalent units of production and cost per...
-
The county assessor feels that the use of more independent variables in the regression equation might improve the overall explanatory power of the model. In addition to size, the assessor feels that...
-
comment on which average deviation is larger (just yours, or the entire group). report the average value average deviation for the entire set of measurements (you can copy and paste the symbol)....
-
The following financial information is for Siennas Health and Fitness, LLC., as of December 31, 2021. Calculate the owners Equity for 2021 and prepare a comparative balance sheet with horizontal...
-
Compose an interoffice email to inform Acme's CEO that, under her request that your office develop a public relations strategy to address tank farm opposition, you have assembled an interdepartmental...
-
Communications Director for Acme Petroleum, a regional fuel distributor. Acme buys diesel and gasoline from oil refineries, stores the fuel in bulk oil terminals (storage depots) that Acme owns, and...
-
Draft a letter to the publisher inviting the newspaper to host a public forum on Acme's proposed tank farm. For an Acme Petroleum letterhead, make up a mailing address, phone, and website address....
-
What is a relational turning point that you or someone you know has encountered that may seem unusual? Why are relational turning points so subjective? Are there any that you think are universal?
-
Priscella pursued a hobby of making bedspreads in her spare time. Her AGI before considering the hobby is $ 4 0 , 0 0 0 . During 2 0 2 2 she sold the bedspreads for $ 1 0 , 0 0 0 . She incurred...
-
1. A standard rotary pump can produce a vacuum pressure of 10 -3 torr. Assuming that only nitrogen is present what is the single-particle collision frequency and mean free path at T = 298 K. How many...
-
A regular deposit of $100 is made at the beginning of each year for 20 years. Simple interest is calculated at i% per year for the 20 years. At the end of the 20-year period, the total interest in...
Study smarter with the SolutionInn App