ACC00724: Financial statements of Nimbin Pty Ltd - Financial Assignment

Financial Assignment:

Question 1 Total marks for Q1. (15 marks) Financial statements of Nimbin Pty Ltd are presented below: Nimbin P/L Statement of Financial Position As at 30 June 2013 and 2014 ($000)     Additional information: Payables include $5,620 (2014) and $5,730 (2013) trade accounts payable; the remainder is accrued expenses. Market prices of issued shares at year-end (2014): Ordinary $12; Preference $6.70. Required: A. Calculate the following ratios for 2014. The industry average for similar businesses is shown. (10 marks) Industry average 1. Rate of return on total assets 22% 2. Rate of return on ordinary equity 20% 3. Profit margin 4% 4. Earnings per share 45c 5. Price-earnings ratio 12.0 6. Dividend yield 5% 7. Dividend payout 70% 8. Current ratio 2.5:1 9. Quick ratio (acid ratio) 1.3:1 10. Receivables turnover 13 11. Inventory turnover 6 12. Debt ratio 40% B. Given the above industry averages, comment on the company’s profitability, liquidity and use of financial gearing. Question 2: a) A local restaurant is noted for its fine food, as evidenced by a large number of customers. A customer was heard to remark that the secret of the restaurant’s success was its fine chef. Would you regard the chef as an asset to the business? If so, would you include the chef on the balance sheet of the business and at what value? b) Indicate the effect of each of the following transactions on any or all of the three financial statements of a business: 1. Statement of financial position 2. Statement of financial performance 3. Statement of cash flows Apart from indicating the financial statements (s) involved, use appropriate phrases such as ‘increase total asset’, ‘decrease equity’, ‘increase income’, ‘decrease cash flow’ to describe the transaction concerned. 1. Purchase equipment for cash. 2. Provide services to a client, with payment to be received within 40 days. 3. Pay a liability. 4. Invest additional cash into the business by the owner. 5. Collect an account receivable in cash. 6. Pay wages to employees. 7. Receive the electricity bill in the mail, to be paid within 30 days. 8. Sell a piece of equipment for cash. 9. Withdraw cash from the owner for private use. 10. Borrow money on a long-term basis from a bank.