Accounting Business Reporting for Decision Making

(Ron) #1

368 Accounting: Business Reporting for Decision Making


8.29   LO4, 5, 6, 7


Rejected Ltd reports the following information.


$’000

Total assets
Profit after tax
Current liabilities
Non-current liabilities

1 920
65
570
830

$’000

Interest revenue
Interest expense
Tax expense
Current assets = 50% of total assets

110
160
45

From this information, calculate and interpret the following ratios (year-end figures will have to be
used because the comparative year figures are not available) and prepare a report on the financial
position and performance of Rejected Ltd.
a. liquidity ratio
b. return on equity
c. return on assets using:
i. profit
ii. EBIT
d. debt ratio.

8.30    LO4, 5, 6, 7, 9


The balance sheet and the statement of profit or loss for MobileNet are presented below.


a. Calculate the following:
i. the current ratio
ii. the return on assets (use year-end figures)
iii. the return on shareholders’ funds (owner’s equity; use year-end figures)
iv. the debt to equity ratio.
b. Prepare a presentation on the financial analysis conducted, commenting on the performance and
position of MobileNet.

MobileNet
Balance sheet as at 30 June 2016

Assets
Current assets
Investments
Property, plant and equipment
Intangible assets

$ 20 000
5 000
32 000
15 000
Total assets $ 72 000
Liabilities
Current liabilities
Long-term liabilities

$9 000
16 000
Total liabilities $ 25 000
Owner’s equity
M. Phone — capital 47 000
Total liabilities & owner’s equity $ 72 000
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