QUESTION 1

RATIOS

1. CASH FLOW TO CAPITAL EXPENDITURE RATIO

Decreases. (because cash from operation decreased)

2. Debt to equity ratio

Decreases. (because value of liability decreases)

Question 4

Given

Days inventory = 115 days

Days for sale receivable = 68 days

Now calculate days payable outstanding:

DPO = Account Payable/ COGS * Nos of days in accounting period

= (574138/ 2,331,649) * 360 = 89 days

Now Calculate business Cash cycle

Cash cycle = Days of inventory + day of sales – Days of payable

= 115 + 68 – 89

Business Cash cycle = 94 days

Question 5

(a)

ROA profit margin = (Net income + interest expense (1-effective rate) + NCI ) / Revenue

= (533,228 + 57,645(1- 0.08) + 71,129) / 3,589,427

ROA PROFIT MARGIN = 18.31%

(b)

Yes, the General admirative expense ratio is 14.8% which is lower than ROA it means it help explain the
relative size of ROA profit margin.
Question 6

Project Next year PPE Using Capital and depreciation method

FORMULA =

PPE next year = PPE current year + projected capital next year – projected depreciation next year

Depreciation Expense Projection

Typical Depreciation rate = depreciation expense /{ gross PPE (-1) – land (-1) – construction in progress (-
1)}

TDR = 213,484 / ( 4,799,063 - 123,518 - 883,705)

TDR = 5.63%

Projected Depreciation = TDR * (Gross PPE(0) – land(0) – construction in progress (0)

Projected depreciation = 5.63% *( 6,817,843- 116,728 - 1,160,545)

Projected depreciation = 311,934

Projected Next year PPE = 6,817,843 + 851,796 – 311,934 = $ 7,357,705