Read the information below and answer the following questions INFORMATION The extracts of the financial statements of Di
Posted: Tue Jul 05, 2022 11:47 am
Read the information below and answer the followingquestions
INFORMATION The extracts of the financial statements of DisneyLimited for 2020 and 2021 are provided below.
Disney Limited
Statement of Comprehensive Income for the year ended 31 December2021
R
Sales 1 960 000
Cost of sales 1 240000
Operating profit 472 000
Interest expense 48 000
Profit before tax 424000
Profit after tax 305 280
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER:
2021(R) 2020 (R)
Assets Non-current assets 2 320 000 1 960 000
Inventories 720 000 440 000
Accounts receivable 360000 500 000
Cash and cash equivalents 440 000 340 000
3 840 000 3 240 000
Equity and liabilities Equity 2 960 000 2 040000
Non-current liabilities 480 000 820 000
Accounts payable 400 000 380 000
3 840 000 3 240000
Additional information
1. The profit after tax for the year ended 31 December 2020 wasR240 000.
2. All purchases and sales of inventories are on credit. Use theinformation provided above to answer the following questions:
3.1 Calculate the ratio (expressed to two decimal places) for2021 to reflect each of the following:
3.1.1 The rate at which inventory is sold (2 marks)
3.1.2 The ratio of the company's net profit to its totalrevenue. (2 marks)
3.1.3 A comparison of the company’s long-term debt to itsequity. (2 marks)
3.1.4 An indicator of how profitable a company is relative toits total assets. (2 marks)
3.1.5 Determination of how easily a company can pay the intereston its outstanding debt. (2 marks)
3.1.6 The period that the company takes to collect the moneyowed to it from its credit sales. (2 marks) Will the company beable to pay its short-term debts if business conditions areunfavourable? Use an appropriate ratio to motivate your answer.
3.2 (4 marks) Comment on the returns of the shareholders ontheir investments (expressed to two decimal places) over thetwo-year period (2021 and 2022). Motivate your answer with therelevant calculations.
3.3 Comment on the returns of the shareholders on theirinvestments (expressed to two decimal places) over the two-yearperiod (2021 and 2022). Motivate your answer with the relevantcalculations.
INFORMATION The extracts of the financial statements of DisneyLimited for 2020 and 2021 are provided below.
Disney Limited
Statement of Comprehensive Income for the year ended 31 December2021
R
Sales 1 960 000
Cost of sales 1 240000
Operating profit 472 000
Interest expense 48 000
Profit before tax 424000
Profit after tax 305 280
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER:
2021(R) 2020 (R)
Assets Non-current assets 2 320 000 1 960 000
Inventories 720 000 440 000
Accounts receivable 360000 500 000
Cash and cash equivalents 440 000 340 000
3 840 000 3 240 000
Equity and liabilities Equity 2 960 000 2 040000
Non-current liabilities 480 000 820 000
Accounts payable 400 000 380 000
3 840 000 3 240000
Additional information
1. The profit after tax for the year ended 31 December 2020 wasR240 000.
2. All purchases and sales of inventories are on credit. Use theinformation provided above to answer the following questions:
3.1 Calculate the ratio (expressed to two decimal places) for2021 to reflect each of the following:
3.1.1 The rate at which inventory is sold (2 marks)
3.1.2 The ratio of the company's net profit to its totalrevenue. (2 marks)
3.1.3 A comparison of the company’s long-term debt to itsequity. (2 marks)
3.1.4 An indicator of how profitable a company is relative toits total assets. (2 marks)
3.1.5 Determination of how easily a company can pay the intereston its outstanding debt. (2 marks)
3.1.6 The period that the company takes to collect the moneyowed to it from its credit sales. (2 marks) Will the company beable to pay its short-term debts if business conditions areunfavourable? Use an appropriate ratio to motivate your answer.
3.2 (4 marks) Comment on the returns of the shareholders ontheir investments (expressed to two decimal places) over thetwo-year period (2021 and 2022). Motivate your answer with therelevant calculations.
3.3 Comment on the returns of the shareholders on theirinvestments (expressed to two decimal places) over the two-yearperiod (2021 and 2022). Motivate your answer with the relevantcalculations.