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ACCT1002 Introduction to Financial Accounting
Tutorial Questions 1
1.1
“ Financial accounting and reporting provide financial information about the entity that is useful to existing and potential investors , lenders and other creditors in making decisions about providing resources to the entity ?”
Discuss
1.2
What are the criteria that requires a proprietary company to prepare financial reports pursuant to the Corporations Act 2001 (Cth)?
1.3
Identify the four (4) financial statements and explain what information each financial statement provides.
1. 4 and 1.5
Complete both 1.4 and 1.5 (Excel)
ICA 1.4_1. 5
1.6
Financial Ratio Analysis
| XYZ , Inc . Balance Sheet ( in millions of $ ) | ||
| Current Assets | 2020 | 2021 |
| C ash | 8 4 | 9 8 |
| Accounts Receivable | 1 65 | 1 88 |
| I nventory | 393 | 4 22 |
| Total Current Assets | 64 2 | 7 08 |
|
|
|
|
| Current Liabilities |
|
|
| Accounts Payable | 312 | 344 |
| Notes Payable (<1 Year ) | 2 31 | 1 96 |
| Total Current Liabilities | 543 | 540 |
| Long - Term Debt | 531 | 4 57 |
| Total Liabilities | 1 ,074 | 997 |
| Owner ' s Equity | 500 | 550 |
| Retained Earnings | 1 ,799 | 2,04 1 |
| Total Owner ' s Equity | 2,29 9 | 2,59 1 |
| Total Liabilities and Equity | 3, 373 | 3, 588 |
| XYZ , Inc . Income Statements ( in millions of $) | ||
| XYZ , Inc . Balance Sheet ( in millions of $ ) | ||
|
| 2020 | 2021 |
| S ales | 2,31 1 | 2,87 2 |
| Cost of Goods Sold | 1 ,344 | 1 ,685 |
| Gross Profit | 967 | 1 ,187 |
| D epreciation | 69 1 | 7 85 |
| Earnings Before Interest & Taxes | 2 76 | 4 02 |
| I nterest | 1 41 | 1 20 |
| Earnings Before Taxes | 1 35 | 2 82 |
| Net Income ( Profit ) | 89.1 | 1 86.1 |
Require d :
a) Calculate the Current Asset Ratio * for 2020 and 2021
b) Calculate the Gross Profit Margin ** for 2020 and 2021
*Current Asset Ratio = Current assets/Current liabilities
**Gross Profit Margin = Gross profit/Sales x 100
c) Comment on the results.