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3 years ago

The financial statements of Hainz Company appear below:

Business

1 answer:

Iteru [2.4K]3 years ago

7 0

Answer:

(1) 2.33 (2)11.42857 times (3) 31.9375 days (4) 3.846154 times (5) 87.6 days (6) 6.00 times (7) 15.75% (8) 1 times (9) 0.35 (10) 14%

Explanation:

Solution

(1) Current ratio:

Current Ratio = Current Asset / Current Liability = =140000/60000 = 2.33

(2) The return of common equity of stockholders:

Accounts receivable turnover ratio = the net credit sales/ average accounts receivable = $400000/$35000

11.42857 times

(3) Accounts collection period = 365/Accounts receivable turnover ratio =365/11.42857

31.9375 days

(4) Test acid ratio:

The Inventory Ratio Turnover = Cost of Goods Sold/Average Inventory

= $2,50,000/$65000

3.846154 times

(5) Average day to sell inventory = Inventory/Cost of Sales *365

=60000/250000*365

87.6 days

(6) The interest earned times:

Times Interest Earned = (Income before taxes and interest)/interest expense

= ($90000+18000)/18000

= 6.00 times

(7)The Profit Margin = Net Income / Sales

= 63000/400000

=15.75%

(8) The asset Turnover = Sales or Revenues / Total Assets

= $400000/400000 = 1 times

(9) Debt to asset ration = Total Liability / Total asset

= $140000/$400000

=0.35

(10)The return on asset ratio = Net Income/Average total asset

= 63000/450000 =14%

Now,

The total current assets = total assets - Net property, plant, equipment = $400000-$260000 = $140000

The Total current liabilities = [accounts payable + notes payable] $20000 + 40000 = $60000

The Average Account Receivable = (Opening Debtors+Closing Debtors)/2 = ($30000+$40000)/2 = $35000

The Average Inventory = (Opening Inventory+Closing Inventory)/2 = ($70000+$60000)/2 = $65000

Long-term debt + Equity = Total liabilities and equity – Total current liabilities = $275.00 – 65 = $201.00

The Total liability = Accounts Payable+ Notes Payable+Bonds Payable = $20000+40000+80000 = 140000

The Average Total asset = (Total opening asset+ total closing asset)/2 = ($400000+$500000)/2 = $4,50,000

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Answer:

a.Supplies expense would be debited for $600.

Explanation:

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2. Fiscal policy Suppose a hypothetical economy is currently in a situation of deficient aggregate demand of $32 billion. Four e

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Answer:

For the Economist A the spending multiplier is = 8, the tax multiplier = 4, the increase in spending is = $4 billion, the tax cut is = $8 billion.

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Explanation:

Solution

Given that:

(1)The Economist A

The Spending multiplier = 8

In closing the output gap of $32 billion, required increase in spending = $32 billion / 8 = $4 billion

Thus,

The tax multiplier = 4

To close output gap of $32 billion, required decrease in tax = $32 billion / 4 = $8 billion

(2)The Economist B

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You have been provided with the following summarized accounts of Golden Times Ltd. For the year ended 31 March 2000:

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The computation of the following financial ratios for Golden Times Ltd is as follows:

<h3>(i) Return on capital employed:</h3>

= Profit after tax/Total assets - current liabilities x 100

= 12.44% (Sh 224,000/ Sh 1,800,000) x 100

<h3>(ii) The profit margin:</h3>

= Profit after tax/Sales revenue x 100

= 5.6% (Sh 224,000/Sh 4,000,000 x 100)

<h3>(iii) The turnover of capital:</h3>

= Sales Revenue/Equity

= 2.86 x (Sh 4,000,000/Sh 1,400,000

<h3>(iv) Current ratio:</h3>

= Current Assets/Current Liabilities

= 1.09 (Sh 1,520,000/Sh 1,400,000)

<h3>(v) Liquid ratio:</h3>

= Current Assets less Stocks /Current Liabilities

= 0.37 (Sh 1,520,000 - Sh 1,000,000/Sh 1,400,000)

<h3>(vi) Number of days accounts receivable are outstanding:</h3>

= Average Accounts Receivable/Sales Revenue x 365

= (Sh. 400,000/Sh. 4,000,000 x 365

= 36.5 days

<h3>(vii) Proprietary ratio:</h3>

= Shareholders equity/Total assets x 100

= 43.75% (Sh. 1,400,000/Sh. 3,200,000)

<h3>(viii) Stock turnover ratio:</h3>

= Cost of goods sold / Average stock

= 2.11 x (Sh. 3,000,000/Sh. 1,420,000)

<h3>(ix) Dividend yield ratio:</h3>

= Dividend per share/Price per share

= 5.36% (Sh. 0.268/Sh.5 x 100)

<h3>(x) Price earnings ratio:</h3>

= Market price per share/Earnings per share

= 8.93x (Sh. 5/Sh. 0.56)

<h3>Data and Calculations:</h3>

Golden Times Ltd

<h3>Balance sheet</h3>

As at 31 March 2000

Sh. Sh. Sh.

Fixed Assets:

Freehold property (Net Book Value) 480,000

Plant and machinery (Net Book Value) 800,000

Motor Vehicle (Net Book Value) 200,000

Furniture and fittings (Net Book Value) 200,000

1,680,000

Current Assets:

Stocks 1,000,000

Debtors 400,000

Investments 120,000

1,520,000

Current Liabilities:

Trade creditors 338,400

Bank overdraft 878,400

Corporation tax 176,000

Dividends payable 107,200 1,400,000 120,000

1,800,000

Financed by:

Authorized share capital – 800,000

Sh. 1 ordinary shares

Issued and fully paid: 400,000 Sh.1 400,000

Ordinary shares

Capital reserve 200,000

Revenue reserve 800,000

Loan capital: 400,000 10% Sh. 1 Debentures 400,000

1,800,000

Golden Times Ltd

<h3>Profit and loss account</h3>

For the year ended 31 March 2000

Sh.

Sales (credit) 4,000,000

Profit after charging all expenses except interest on 440,000

debentures

Less: Debenture interest (40,000)

Profit before tax 400,000

Corporation tax 176,000

Profit after tax 224,000

Less: Ordinary dividend proposed (107,200)

Retained profit transferred to revenue reserve 116,800

Beginning stock = Sh. 1,840,000 (Sh. 3,000,000 + 1,000,000 - 2,160,000)

Average stock = Sh. 1,420,000 (Sh. 1840,000 + Sh. 1,000,000)/2

Dividend per share = Sh. 0.268 (Sh 107,200/400,000)

Earnings per share = Sh. 0.56 (Sh. 224,000/400,000)

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