Accounting Business Reporting for Decision Making

370 Accounting: Business Reporting for Decision Making

Qantas Airways Limited Virgin Australia Holdings Limited

Gross gearing (D/E) 161.36% 270.59%

Current ratio 0.68 0.69

NTA per shares ($) 1.20 0.15

PER 9.84 430

Net profit margin 4.53% 0.07%

Price/Book value 2.01 1.48

Source: Information from Datanalysis, http://www.datanalysis.morningstar.com.au.

8.34   LO8, 9

The market performance ratios for Bispectacle are presented below. Calculate the entity’s dividend

payout ratio, interpret the ratio, and explain why an investor would be interested in this ratio.

Comment on Bispectacle’s NTAB, EPS, DPS, dividend payout and PER.

2017 2016 2015 2014 2013

NTAB per share

EPS

DPS

PER

$ 0.36

15.9c

9.5c

22.6

$ 0.52

17.3c

16.5c

13.9

$ 0.70

17.1c

16.5c

14.8

$ 0.75

22.1c

16.5c

14.5

$ 0.73

20.1c

15.0c

17.7

8.35   LO6

It is important for businesses to have efficient processes and systems in place for collecting monies

from debtors. The business and industry portal of the Queensland government (www.business.qld.

gov.au/business) contains advice for offering credit and managing the risk associated with debtors.

Referring to the guide, identify five actions that a business manager can do to manage debtors.

8.36   LO4, 7

You have been given the following information regarding an entity. One of your friends is

interested in investing in it. Help your friend by calculating some cash-based ratios, explaining

what the ratios are measuring.

Cash from operating activities

Capital expenditure

Current liabilities

Non-current liabilities

Sales revenue

Dividends paid

$184 000

375 000

168 000

985 000

159 000

45 000

8.37   LO4, 6

Fit and Fantastic Ltd produces and sells a range of fitness equipment. Its capital expenditure for

the current year for new plant was $300 000, and dividends paid were $40 000. Current liabilities

and non-current liabilities were $56 000 and $700 000, respectively. Sales for the current year were

$525 000, and net cash flow from operating activities was $88 000. Compute and interpret the cash

flow ratio, debt coverage ratio and cash flow to sales ratio.

Problems

 BASIC |   MODERATE |    CHALLENGING

8.38 Trend and vertical analysis   LO1, 3, 9

The statement of profit or loss figures for the past five years for Grand Hotel are presented below.

Using the information:

a. prepare a trend analysis and comment on the trends

b. prepare a vertical analysis (using revenue as the base amount) and comment on the trends

(continued)