Question

Calculate the following ratios for 2012 and show the steps involved:

a) Inventory turnover ratio

b) average days in inventory

c) receivables turnover ratio

d) average collection period

e) asset turnover ratio

f) profit margin on sales

g) return on assets

h) return on shareholders equity

i) equity multiplier

j) return on shareholders equity using the Du Port framework

Note: See attached balance sheet and income statement below as reference

Parent Company 2012 RO Consolidated 2012 Notes 2011 2011 RO RO RO 8 6 45,798,586 95,233,015 3,750,000 66,554,403 2,037,430 74,020,543 45,798,586 100,614,173 2,632,513 7 8 70,696,303 2,632,513 74,020,543 175,000 147,524,359 9 125,000 125,000 144,906,601 175,000 149,220,272 142,737,376 10 11 12 13 11,338,112 4,844,527 3,429.280 2,585,307 15,000,000 1,959.891 39,157,117 181,894,493 11,104,665 5,695,005 4,243,351 2.974,057 3,500,000 3.821.239 31,338,317 178,862,676 15,373,384 8,998,813 3,429,280 3,423,822 15,000,000 4,160,981 50,386,280 195,292,881 15,843,951 8,472,561 4,243,351 3,861,895 3,500,000 3,932,346 39,854,104 189,074,376 14 ASSETS Non-current assets Goodwill Property, plant and equipment Investment in associates Investment in subsidiaries Investments available for sale Total non-current assets Current assets Inventories Trade receivables Investments held for trading Prepayments and other receivables Bank deposits Cash and cash equivalents Total current assets Total assets EQUITY AND LIABILITIES Capital and reserves Share capital Share premium Legal reserve Asset replacement reserve Voluntary reserve Retained earnings Total equity Non-current liabilities Term loans - non current portion Deferred tax liability Total non-current liabilities Current liabilities Term loans - current portion Short term borrowings Trade and other payables Total current liabilities Total equity and liabilities Net assets per share 15 17 18 19 20,000,000 13,456,873 6,666,667 3,647,566 6,352,434 57,795,984 107,919,524 20,000,000 13,456,873 6,666,667 3,647,566 6,352,434 50,524,731 100,648,271 20,000,000 13,456,873 6,666,667 3,647,566 6,352,434 66,987,600 117,111,140 20,000,000 13,456,873 6,666,667 3,647,566 6,352,434 52,284,187 102,407,727 20 21 22 23 58,000,000 3,190,546 61,190,546 47,102,167 3,248,546 50,350,713 58,000,000 3,190,546 61,190,546 47,102,167 3,248,546 50,350,713 22 4,000,000 17,111,833 18,191,607 2,926,068 15,198,261 36,315,936 24 8,784,423 12,784,423 181,894,493 4,000,000 223,426 12,767,769 16,991,195 195,292,881 10,751,859 27.863,692 178.862.676 189,074,376 25 0.539 0.503 0.585 0.512

Answer 1

1. Ratio Analysis -

Ratio Computation 2012 Inventory Turnover Ratio Cost of Goods Sold Average Inventory 62,885,189 15,608,668 4.03 Times 365 Average Days In Inventory 365 Inventory Turnover 90.60 Days 4 Receivables Turnover Ratio Net Sales Average Accounts Receivable = 92,802,705 8,735,687 10.62 Times 365 Average Collection Period 365 Receivable Turnover Ratio Il 34.36 Days 11 Asset Turnover Ratio Net Sales Average Total Assets 92,802,705 192, 183,629 48.29% Profit Margin On Sales Net Income Net Sales 24,533,815 92,802,705 26.44% Return On Assets Net Income Average Total Assets = 24,533,815 192,183,629 12.77% Return On Shareholders Equity Net Income Shareholder's Equity 24,533,815 109,759,434 22.35% Equity Multiplier Total Assets Total Equity 50,386,280 117,111,140 43.02% Return On Shareholders Equity Using The Du Port Profit Margin On Sales X Return On Assets X Equity Multiplier = 1.45%