The following are from the latest financial statements of Ytrew Limited and its main competitor, both of which are manufacturing firms:
Income statement
Ytrew Limited
Competitor
Net sales (all credit)
$ 2,116,800
$ 19,958,400
Cost of goods sold
(1,672,272)
(15,767,136)
Gross Profit
444,528
4,191,264
Operating expenses
(232,848)
(1,995,840)
Operating profit
211,680
2,195,424
Interest expense
(49,228)
(665,280)
Profit before tax
162,452
1,530,144
Tax (30%)
(48,736)
(459,043)
Net profit
113,716
1,071,101
Balance she
et
Ytrew Limited
Competitor
Current assets
Cash
$ 21,168
199,584
Accounts receivable
214,580
1,968,500
Inventories
59,724
543,694
Total current assets
295,472
2,711,778
Fixed Assets
712,528
8,376,222
Total Assets
1,008,000
11,088,000
Required:
1.
Calculate the following ratios for Ytrew Limited and its competitor (do not show formulas!):
(14 marks)
Average collection period
Current ratio
Debt ratio
Equity multiplier
Fixed asset turnover
Gross profit margin
Interest coverage ratio
Inventory turnover
Net profit margin
Operating profit margin
Quick ratio
Return on assets
Return on equity
Total asset turnover
2.
(15 marks)
Based on your results from part 1, compare and discuss the liquidity and capital structure of the two firms.
PART A is continued on the next page…
3. (16 marks) Perform a decomposition of operating profitability similar to that carried out in the textbook and compare the determinants of operating profitability for Ytrew and its competitor. Based on your analysis, discuss areas where Ytrew’s management might seek improvements in order to match its competitor.
4. Perform a DuPont decomposition of return of equity for Ytrew and its competitor and discuss any differences between the two firms. (15 marks)
Download the annual report of Boral Limited from the Moodle site and answer the following questions.
1.
Provide a brief summary of the company. Include details such as industry sector, primary activities, and recent performance (250 words maximum).
(10 marks)
2.
Based on the cash flow statement of the company, write a brief narrative that describes the major operating, investing and financing activities of the company’s management team during the financial year (250 words maximum).
(10 marks)
3.
Assuming that you are a senior manager of this company, list five non-financial items of information that you might want to have (250 words maximum).
(10 marks)
4.
List some key measures the company took to ensure that its business operations have incorporated corporate social responsibility (CSR) and sustainability (250 words maximum).
