ACC501 IDEA solution for first assignment
QUESTION # 01
In this question you are required to make time series analysis for Crestex company
for the years 2009 and 2010
Calculate the three ratios by applying following formulae for both years 2009 and
2010 separately and then compare which
year was more profitable for the company
by interpreting the equation
Total debt ratio = Total assets – Total equity / Total assets
Debt-equity ratio = Total Debt / Total equity
Interest coverage ratio = Earning before interest and taxes / Interest
From the data extracted from Balance sheet in annual reports of Crestex:
Total equity is (2010=2,672,439) (2009=2,261,837)
Total Assets are (2010=10,988,698 ) (2009=10,815,934)
Interest is (2010= ----) (2009= 22081)
Earning before interest and taxes (2010=463,491) (2009=238,518 )
Current liabilities (2010=6,010,688 ) (2009=5,805,685)
Current Assets (2010=4,202,903) (2009=4,085,672)
Inventory (2010=1,047,150) (2009=940,421)
Cash(2010=16,619) (2009=18,931)
QUESTION # 02
In this question you have to make cross company analysis for both the companies
calculate following ratios for both companies
Current Ratio= current assets / Current liabilities
Quick (acid test) ratio = current assets – inventory / Current liabilities
Cash ratio= Cash /Current liabilities
Use above data for Crestex and following is the data for KTM
From the data extracted from Balance sheet in annual reports of KTM:
Current liabilities are (2010=8,169,138 ) (2009=6,672,527)
Current Assets are (2010=5,903,185) (2009=4,530,22)
Inventory is (2010=2,393,113) (2009=1,779,826)
Cash (2010=78,851) (2009=80,297)
After calculating the ratios show which company is in better condition by showing
current financial position
Interpretation in necessary for marks
there are some mistakes above in the data extracted from annual reports..find below
correct data:
Crestex Mills Cash(2010=16,419)
KTM Current Liabilities (2009=6,762,527)
KTM Current Assets (2009=4,530,222)
please correct these entries.
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