Answer to Question #51591 in Other Management for ALEXANDER M

Question #51591
Question 1 a). A company is considering the following investment projects. Cash flows in Kes Project Initial Outlay C1 C2 A (10,000) 10,000 B (10,000) 7,500 7,500 12,000 C (10,000) 2,000 4,000 3000 D (10,000) 10,000 3,000 3,000 Required: Rank the projects according to: i. Payback period (1 Marks) ii. Accounting rate of return (1 Marks) iii. Internal Rate of Return (2 Marks) iv. Profitability Index (1 Marks) v .Net present value (2 Marks) Question 2. a).The following is a summary of the financial statements of Hugo’s company Ltd. Summary of financial statements Balance sheet Kes ‘000 Kes’000s Non current assets Buildings at cost 300 Less depreciation to date (255) 45 Equipment at cost 140 Less depreciation to date (119) 21 66 Current assets Inventory 200 Accounts receivable 205 Bank 4 409 Total assets 475 Current liabilities Accounts payable (245) Net assets 230 Financed by: Capital accounts Balance at start of year 240 Add net profit 60 300 Less drawings (70) 230 Income statements Sales 1,800 Less :Cost of goods sold 300 Opening inventory 1,300 1,600 Less closing inventory (200) (1,400) Gross profit 400 Less depreciation 22 Other expenses 318 (340) Net profit 60 Calculate the following ratios: i. Gross profit Margin. (1 Marks) ii. Net profit Margin (1 Marks) iii. Expenses as a % of revenue (1 Marks) iv. Inventory turnover (1 Marks) v. Return on capital employed (1 Marks) vi. Current ratio (1 Marks) vii. Acid test ratio (1 Marks) viii. Accounts receivables ratio (1Marks)
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