CHAPTER 8 Analysis and interpretation of financial statements 371c. identify other non-financial ratios that would be of interest to the management of Grand Hotel.
Grand Hotel
Statement of profit or loss for the period 2013 to 2017
2013
$0002014
$0002015
$0002016
$0002017
$000
Revenue
Interest received$ 320 800
2 500$ 376 000
2 900$ 400 400
3 010$ 414 500
2 950$ 422 600
2 900
Total revenue 323 300 378 900 403 410 417 450 425 500
Expenses
Cost of food
Advertising expense
Insurance expense
Rent expense
Utilities expense
Depreciation
Wages and salaries
Interest expense142 000
28 200
15 500
25 000
1 700
12 000
60 000
3 400181 800
36 400
17 000
29 500
2 200
12 000
71 600
5 200185 200
40 900
17 600
31 800
2 240
12 000
73 300
5 600198 900
45 400
17 600
34 100
2 330
15 000
76 100
5 800204 500
45 400
22 700
36 400
2 390
15 000
78 400
5 900
Total expenses 287 800 355 700 368 640 395 230 410 690
Profit $ 35 500 $ 23 200 $ 34 770 $ 22 220 $ 14 8108.39 Calculating and analysing days inventory turnover, days debtors, current ratio and
quick ratio LO5, 6, 9
Summary information from the 2018 statement of profit or loss of Coconut Plantations Pty Ltd is
provided below.Sales revenue
Cost of sales$1 675 000
1 025 000
Gross profit
Other income
Operating expenses650 000
1 500
315 000
Profit (before tax)
Income tax$ 336 500
100 950
Profit (after tax) $ 235 550The operating expenses include $18 000 of interest expense.
The following amounts have been extracted from the company’s balance sheets.2018
$2017
$
Cash
Accounts receivable
Inventory
Prepaid expenses
Accounts payable
Accrued expenses
Income tax payable59 310
145 000
170 000
25 000
78 000
5 000
100 95037 200
93 010
175 000
4 500
42 500
7 500
98 400Required
a. Calculate and interpret the following:
i. days inventory turnover iv. quick ratio
ii. days debtors v. gross profit margin
iii. current ratio vi. profit (after tax) margin
b. If you are contemplating providing a short-term loan to Coconut Plantations Pty Ltd discuss
what these ratios reveal about the associated risk.