2.1 Use the information provided below to calculate the ratios for 2022 (expressed to two decimal places) that would reflect each of the following: 2.1.1 The profit of the company relative to sales after deducting the cost of sales. 2.1.2 The ability of the company to profitably utilize its capital, which includes both debt and equity. 2.1.3 The proportion of the total assets that are financed by total debt. 2.1.4 The ability of the company to repay its short-term debts under distress conditions, on the assumption that inventories would have no value at all. 2.1.5 The portion of the company's profit that is allocated to each outstanding ordinary share. 2.1.6 An indication of the percentage of profit that has been put back into the company. 2.2 Comment on the following ratios that have been calculated for Zorro Ltd: 2.2.1 Profit margin 2.2.2 Return on equity INFORMATION Excerpts of the financial data of Zorro Ltd for 2022 are as follows: STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 Sales Cost of sales Operating profit Interest expense Profit before tax Company tax STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 Additional information Assets Non-current assets Inventories Accounts receivable Cash Equity and abilities Ordinary share capital (704 000 shares) Retained eamings Long-term loan (12% pa) Accounts payable Dividends payable (for 2022) 1. 2. All purchases and sales of inventories were on credit. Inventories on 31 December 2021 amounted to R2 880 000. 3. The following ratios were calculated for 2022 and 2021: 4. Profit margin Return on equity R 7 800 000 5280 000 796 800 105 600 691 200 R 207 360 2352 000 3120 000 931 200 9600 6412800 1680 600 1382400 888000 2002 800 360 000 6412 800 2022 2021 6.20% 13.63% 15.75% 21.85% The market prices of the company's shares for 2022 and 2021 were R4.00 and R3.50 respectively.
2.1 Use the information provided below to calculate the ratios for 2022 (expressed to two decimal places) that would reflect each of the following: 2.1.1 The profit of the company relative to sales after deducting the cost of sales. 2.1.2 The ability of the company to profitably utilize its capital, which includes both debt and equity. 2.1.3 The proportion of the total assets that are financed by total debt. 2.1.4 The ability of the company to repay its short-term debts under distress conditions, on the assumption that inventories would have no value at all. 2.1.5 The portion of the company's profit that is allocated to each outstanding ordinary share. 2.1.6 An indication of the percentage of profit that has been put back into the company. 2.2 Comment on the following ratios that have been calculated for Zorro Ltd: 2.2.1 Profit margin 2.2.2 Return on equity INFORMATION Excerpts of the financial data of Zorro Ltd for 2022 are as follows: STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 Sales Cost of sales Operating profit Interest expense Profit before tax Company tax STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 Additional information Assets Non-current assets Inventories Accounts receivable Cash Equity and abilities Ordinary share capital (704 000 shares) Retained eamings Long-term loan (12% pa) Accounts payable Dividends payable (for 2022) 1. 2. All purchases and sales of inventories were on credit. Inventories on 31 December 2021 amounted to R2 880 000. 3. The following ratios were calculated for 2022 and 2021: 4. Profit margin Return on equity R 7 800 000 5280 000 796 800 105 600 691 200 R 207 360 2352 000 3120 000 931 200 9600 6412800 1680 600 1382400 888000 2002 800 360 000 6412 800 2022 2021 6.20% 13.63% 15.75% 21.85% The market prices of the company's shares for 2022 and 2021 were R4.00 and R3.50 respectively.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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