- Question 3 Has Four Parts A B C D For A Total Of 32 Marks Aplus Pte Ltd Is A Multinational Corporation Based In S 1 (53.54 KiB) Viewed 19 times
will give you 5 upvotes.!
QUESTION 3 HAS FOUR PARTS (A, B, C, D) FOR A TOTAL OF 32 MARKS Aplus Pte. Ltd. is a multinational corporation based in Singapore with a subsidiary. Cminus Ltd, operating in Australia. The CFO of Cminus has prepared the financial statements, reported in Australian dollars (AUD), to analyze the effects of how a choice of functional currency would impact certain key financial ratios. Exhibit 2: Cminus Ltd. Selected Financial Data at 31 December 2018 Balance Sheet (AUD thousands) Cash 980 Accounts receivable 900 Inventory 1,200 Mon Property, plant, and equipment (PPE) Accumulated depreciation E Total assets L 450 Accounts payable L Long-term debt 3,000 P Capital stock 1,500 Retained earnings 830 5,780 Total liabilities and equity Sales 12,000 Cast of goods sold (COGS) 9.000 Net income 1,180 Dividends (350) Retained earnings 1830 Exhibit 3: Exchange Rates Applicable to Cminus Ltd. Date SGD/AUD 0.968 1 January 2018 Average, 2018 0.906 Weighted average rate when inventory was acquired 0.954 1 December 2016 when dividends were declared 0.962 31 December 2018 0.971 (3A) If Cminus Ltd. uses the Singapore dollar (SGD) as its functional currency, what would be the leverage ratio (total debt/total assets)? [10 marks] (38) Compare the inventory turnover ratio (COGS/Inventory) under the current rate method and the temporal method. [10 marks] (3C) Compare the fixed asset turnover ratio (Sales/PPE) under the current rate method and the temporal method. [10 marks] (3D) Based on your answers to parts (3B) and (3C), explain which translation method Cminus should use, assuming it has a choice in method, if the company would like to show higher efficiency. [2 marks] Income Statement (AUD thousands) 13,000 (300) 5,780