PRACTICE EXERCISES

1. The comparative condensed statements of financial position of Roadway Ltd.

are presented below.

ROADWAY LTD.
Condensed Statements of Financial Position
December 31 (in thousands)
2022 2021
Assets
Intangibles £ 25,000 £ 40,000
Property, plant, and equipment (net) 99,000 90,000
Current assets 76,000 80,000
Total assets £200,000 £210,000
Equity and Liabilities
Equity £ 16,200 £ 12,000
Non-current liabilities 143,000 150,000
Current liabilities 40,800 48,000
Total equity and liabilities £200,000 £210,000

Instructions:

(a) Prepare a horizontal analysis of the statement of financial position data for
Roadway Ltd. using 2021 as a base.
-
(b) Prepare a vertical analysis of the statement of financial position data for Roadway
Ltd. in columnar form for 2022.
 2. Rondo plc’s comparative statements of financial position are presented below.

RONDO plc
Statements of Financial Position
December 31
2022 2021
Land £ 20,000 £ 26,000
Buildings 70,000 70,000
Accumulated depreciation—buildings (15,000) (10,000)
Inventory 9,000 7,000
Accounts receivable 21,200 23,400
Cash 5,300 3,700
Total £110,500 £120,100
Share capital—ordinary £ 75,000 £ 69,000
Retained earnings 25,130 20,000
Accounts payable 10,370 31,100
Total £110,500 £120,100

Rondo’s 2022 income statement included net sales of £120,000, cost of goods sold
of £70,000, and net income of £14,000.

Instructions:

Compute the following ratios for 2022.

(a) Current ratio.

(b) Acid-test ratio.
(c) Accounts receivable turnover.
(d) Inventory turnover.
(e) Profit margin.
(f) Asset turnover.
(g) Return on assets.
(h) Return on ordinary shareholders’ equity.
(i) Debt to assets ratio.

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