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    This document provides instructions and information for an assignment on financial management ratios. It includes: 1) True/false and discussion questions about financial ratios that measure business activities and relationships over time. 2) An illustration with the financial statements of a company for two years, to calculate 12 activity ratios and identify areas for control. 3) Instructions to read questions carefully and provide precise answers in calculations and short discussions.

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    4 Assignment 4 PDF

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    asmelash gidey
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    This document provides instructions and information for an assignment on financial management ratios. It includes: 1) True/false and discussion questions about financial ratios that measure business activities and relationships over time. 2) An illustration with the financial statements of a company for two years, to calculate 12 activity ratios and identify areas for control. 3) Instructions to read questions carefully and provide precise answers in calculations and short discussions.

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    This document provides instructions and information for an assignment on financial management ratios. It includes: 1) True/false and discussion questions about financial ratios that measure business activities and relationships over time. 2) An illustration with the financial statements of a company for two years, to calculate 12 activity ratios and identify areas for control. 3) Instructions to read questions carefully and provide precise answers in calculations and short discussions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    87 views2 pages

    4 Assignment 4 PDF

    Uploaded by

    asmelash gidey
    This document provides instructions and information for an assignment on financial management ratios. It includes: 1) True/false and discussion questions about financial ratios that measure business activities and relationships over time. 2) An illustration with the financial statements of a company for two years, to calculate 12 activity ratios and identify areas for control. 3) Instructions to read questions carefully and provide precise answers in calculations and short discussions.

    Copyright:

    © All Rights Reserved
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    Download as pdf or txt
    of 2

    Micro Link Information Technology & Business College

    Postgraduate Program
    Masters of Business Administration (MBA)
    Advanced Financial Management
    Chapter-4

    Dear readers/ students, in order to check your understanding of the course Financial Management
    (FM), you are expected to answer the following questions correctly and submit your answer
    accordingly through Online in softcopy. Perform each questions according to their instructions.

    Type of Assessment: Assignment-4

    Part-I- True or False Item Questions


    Instruction:
    Read the Questions Carefully and if the Statement is Correct Write “True” Otherwise False.

    1. The cycle of business activities commences with the disposal of output and terminate with
    the deployment of resources.
    2. Ratios that we have identified for control of activities measure relationships between key
    elements at any point of time.
    3. Ratios are useless to standardize numbers, facilitate comparisons and used to highlight
    weaknesses and strengths.
    4. Liquidity ratio answers the question can we make required payments as they fall due?
    5. Inventory turnover ratio shows the number of times inventory replenishment is required
    during an accounting period to achieve a given level of sales.

    Part-II- Discussion Questions


    Instruction:
    Write the correct answer in a short and precise ways for the following questions

    1. List down and explain the fundamental classifications of ratios.


    2. Describe the different computation and purpose of management oriented activity ratios.

    1
    Part-III- Work-out Item Questions

    Instruction:
    Read the Questions Carefully and perform each of them using the appropriate methods.

    Illustration:
    Compute the twelve activity ratios for the two years with the help of the following information
    which has been extracted from the annual accounts of Orient Paper & Industries Private Limited. On
    the basis of the limited information available with you, what areas would you identify for control?

    Orient Paper & Industries Private Limited


    Balance Sheet as at Year Ending on December 31
    (Amounts in Dollars of Thousands)
    Assets: 3013 2014 2015
    Cash 64 78
    Debtors 58 60 65
    Inventories 62 84 117
    Fixed Assets (net) 360 340
    Investments 32 43
    Other Assets 10 7
    Total 600 650
    Liabilities and Equity:
    Current Liabilities 82 58
    Long-term Loans 182 170
    Equity Share capita ($100 each) 240 240
    General Reserves 96 182
    Total 600 650
    Income Statement for the Year Ended December 31
    Gross Sales 370 480
    Less: Returns 20 30
    Net Sales 350 450
    Less: Cost of Goods Sold (includes $70 fixed per year) 190 215
    Gross Profit 160 235
    Less: Operating Expenses (includes $10 fixed a year) 50 72
    Operating Profit (EBIT) 110 163
    Less: Interest Expenses 20 18
    Earnings Before taxes 90 145
    Less: Taxes (40%) 36 58
    Net Income (Earnings After taxes) 54 87

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