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  • Session 2 Interpretation of Accounts - Problems Answers

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    Dang Minh Ha
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    This document provides answers to self-assessment questions about interpreting financial ratios for different companies. It identifies the type of companies based on their balance sheets and calculates key ratios for Company A and Company B. It finds that Company A has higher returns on capital employed and net profit margins but a lower asset turnover. Company B generates sales more efficiently but at lower margins. Additional financial information would provide more insights into liquidity, costs, and leverage.

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    Session 2 Solutions

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    This document provides answers to self-assessment questions about interpreting financial ratios for different companies. It identifies the type of companies based on their balance sheets and calculates key ratios for Company A and Company B. It finds that Company A has higher returns on capital employed and net profit margins but a lower asset turnover. Company B generates sales more efficiently but at lower margins. Additional financial information would provide more insights into liquidity, costs, and leverage.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    10 views1 page

    Session 2 Interpretation of Accounts - Problems Answers

    Uploaded by

    Dang Minh Ha
    This document provides answers to self-assessment questions about interpreting financial ratios for different companies. It identifies the type of companies based on their balance sheets and calculates key ratios for Company A and Company B. It finds that Company A has higher returns on capital employed and net profit margins but a lower asset turnover. Company B generates sales more efficiently but at lower margins. Additional financial information would provide more insights into liquidity, costs, and leverage.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    Session 2 Interpretation of Accounts - Problems

    Answers to self-assessment questions 1 The companies can be identified as follows: a - grocer (low debtors) b - manufacturer (high fixed assets) c - finance company (no stocks) 2 i The ratios are as follows: A The return on capital employed !""" # 1$% &""" # 2"% $"'""" 2&'""" The net profit to sales !""" # 1"% &""" # (% !"'""" )"'""" The asset turno*er !"'""" # 1+$ times $"'""" )"'""" #2+! times 2&'"""

    ii ,ou should ha*e commented on the fact that is producing better returns for owners by using assets to generate sales more efficiently+ -ales seem to be earned by by tighter margins' which may be as a result of lower prices+ iii Additional information relating to li.uidity' costs' and gearing would pro*ide more insights+

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