Excerpts of the financial data of Sapphire Ltd for 2022 are as follows: STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 R Sales Cost of sales Operating profit Interest expense Profit before tax Company tax STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 Assets Non-current assets Inventories Accounts receivable Cash Equity and liabilities Ordinary share capital (704 000 shares) Retained earnings Long-term loan (12% p.a.) Accounts payable Dividends payable (for 2022) 7 800 000 5 280 000 796 800 105 600 691 200 207 360 R 2 352 000 3 120 000 931 200 9 600 6 412 800 1 689 600 1 382 400 888 000 2 092 800 360 000 6 412 800 1. 2. Additional information All purchases and sales of inventories were on credit. Inventories on 31 December 2021 amounted to R2 880 000. 3. The following ratios were calculated for 2022 and 2021: 2022 2021 Profit margin 6.20% 13.63% Return on equity 15.75% 21.85% 4. The market prices of the company's shares for 2022 and 2021 were R4.00 and R3.50 respectively.
Excerpts of the financial data of Sapphire Ltd for 2022 are as follows: STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022 R Sales Cost of sales Operating profit Interest expense Profit before tax Company tax STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022 Assets Non-current assets Inventories Accounts receivable Cash Equity and liabilities Ordinary share capital (704 000 shares) Retained earnings Long-term loan (12% p.a.) Accounts payable Dividends payable (for 2022) 7 800 000 5 280 000 796 800 105 600 691 200 207 360 R 2 352 000 3 120 000 931 200 9 600 6 412 800 1 689 600 1 382 400 888 000 2 092 800 360 000 6 412 800 1. 2. Additional information All purchases and sales of inventories were on credit. Inventories on 31 December 2021 amounted to R2 880 000. 3. The following ratios were calculated for 2022 and 2021: 2022 2021 Profit margin 6.20% 13.63% Return on equity 15.75% 21.85% 4. The market prices of the company's shares for 2022 and 2021 were R4.00 and R3.50 respectively.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 32BEB
Related questions
Question
Use the information provided from Sapphire Ltd to calculate the ratios for 2022 (expressed to two decimal places) that would reflect each of the following:
1. The profit of the company relative to sales after deducting the cost of sales.
2. The ability of the company to profitably utilize its capital, which includes both debt and equity.
3. The proportion of the total assets that are financed by total debt.
4. The ability of the company to repay its short-term debts under distress conditions, on the assumption that inventories would have no value at all.
5. The portion of the company's profit that is allocated to each outstanding ordinary share.
6. An indication of the percentage of profit that has been put back into the company.
Transcribed Image Text:Excerpts of the financial data of Sapphire Ltd for 2022 are as follows:
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022
R
Sales
Cost of sales
Operating profit
Interest expense
Profit before tax
Company tax
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022
Assets
Non-current assets
Inventories
Accounts receivable
Cash
Equity and liabilities
Ordinary share capital (704 000 shares)
Retained earnings
Long-term loan (12% p.a.)
Accounts payable
Dividends payable (for 2022)
7 800 000
5 280 000
796 800
105 600
691 200
207 360
R
2 352 000
3 120 000
931 200
9 600
6 412 800
1 689 600
1 382 400
888 000
2 092 800
360 000
6 412 800
1.
2.
Additional information
All purchases and sales of inventories were on credit.
Inventories on 31 December 2021 amounted to R2 880 000.
3.
The following ratios were calculated for 2022 and 2021:
2022
2021
Profit margin
6.20%
13.63%
Return on equity
15.75%
21.85%
4.
The market prices of the company's shares for 2022 and 2021 were R4.00 and R3.50 respectively.
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