The extracts of the financial statements of Disney Limited for 2020 and 2021 are provided below. Disney Limited Statemen
Posted: Wed Jul 06, 2022 6:00 am
The extracts of the financial statements of Disney Limited for2020 and 2021 are provided below.
Disney Limited Statement of Comprehensive Income for theyear ended 31 December 2021
Sales R1 960 000
Cost of sales R1 240 000
Operating profit R472 000
Interest expense R48 000
Profit before tax R424 000
Profit after tax R305 280
STATEMENT OF FINANCIAL POSITION AS AT 31DECEMBER:
2021(R) 2020 (R)
Assets Non-current assets 2 320000 1 960 000
Inventories 720 000 440 000
Accounts receivable 360 000 500 000
Cash and cash equivalents 440000 340 000
3 840000 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 840000 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 profitto its total revenue. (2 marks)
3.1.3 A comparison of the company’slong-term debt to its equity. (2 marks)
3.1.4 An indicator of how profitable acompany is relative to its total assets.
3.1.5 Determination of how easily a companycan pay the interest on its outstanding debt. (2 marks)
3.1.6 The period that the company takes tocollect the money owed to it from its credit sales. (2 marks)
3.2 Will the company be able to pay its short-term debts ifbusiness conditions are unfavourable? Use an appropriate ratio to motivate your answer. (4 marks)
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. (4 marks)
Disney Limited Statement of Comprehensive Income for theyear ended 31 December 2021
Sales R1 960 000
Cost of sales R1 240 000
Operating profit R472 000
Interest expense R48 000
Profit before tax R424 000
Profit after tax R305 280
STATEMENT OF FINANCIAL POSITION AS AT 31DECEMBER:
2021(R) 2020 (R)
Assets Non-current assets 2 320000 1 960 000
Inventories 720 000 440 000
Accounts receivable 360 000 500 000
Cash and cash equivalents 440000 340 000
3 840000 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 840000 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 profitto its total revenue. (2 marks)
3.1.3 A comparison of the company’slong-term debt to its equity. (2 marks)
3.1.4 An indicator of how profitable acompany is relative to its total assets.
3.1.5 Determination of how easily a companycan pay the interest on its outstanding debt. (2 marks)
3.1.6 The period that the company takes tocollect the money owed to it from its credit sales. (2 marks)
3.2 Will the company be able to pay its short-term debts ifbusiness conditions are unfavourable? Use an appropriate ratio to motivate your answer. (4 marks)
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. (4 marks)