Final Term Exam-Spring 2022
Final Term Exam-Spring 2022
Final Term Exam-Spring 2022
Liabilities
Short-term debt 15,000 15,000
Notes payable 19,036 18,159
Accounts payable 76,915 117,757
Taxes payable 10,529 11,901
Accrued expenses 101,465 119,685
Total current liabilities 222,945 282,502
Long-term debt 128,102 113,307
Other liabilities 125,874 114,166
Total liabilities 476,921 509,975
Equity
Common stock 289,000 289,000
Paid-in capital 37,776 37,422
Retained earnings 531,695 611,075
Less: treasury stock 253,272 282,876
Total equity 1,111,743 1,220,373
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AAST Msc program
Student Name: Dr.Mohamed El-Deeb
Final-Term Exam-Spring 2022
Additional information
- No of outstanding shares in 2020 and 2021 is 10,000 shares.
- The market price of the share in 2020 is 10 L.E and in 2021 is 11 L.E.
Required
a) Calculate ratios that would be helpful in assessing the profitability, operating efficiency
(Activity) and risk (Debt) associated with the firm’s financial position. Use end of year values
and calculate ratios for both years. (10 Marks)
liquidity situation.
7. The accounts receivable turnover is both a measure of liquidity and a measure of
activity.
8. The inventory turnover is computed by dividing cost of goods sold by average
inventory.
9. Vertical analysis is a technique to evaluate each item in a financial statement as a
percent of a base amount or item.
10.The four classification of ratio analysis are liquidity ratio, fixed asset ratio,
profitability ratio and efficiency ratios.
11.Solvency ratios measure the business’ very short-term ability to meet all financial
obligations.
12.Price earning ratio shows how much an investor is willing to pay for each dollar
of earnings given the actual market price.
13.A ratio can be expressed as a percentage, a rate, or a proportion.
14.Profitability ratios are frequently used as a basis for evaluating management's
operating effectiveness
15.Earnings per share is calculated only for ordinary shares.
16.Times interest earned is profitability ratio.
17.Inventory turnover is calculated by dividing cost of goods sold by the ending
inventory.
18.Financial ratios are meaningless unless they are compared to a company standard,
or historical or industry data.
19.Return on assets can be stated to equal net income/sales times sales/total assets.
20.DuPont analysis deals primarily with the current and quick ratio.
Take the role of an investment analyst at Moon. It is your job to recommend investments for your
client. The only information you have is the following ratio values for two companies in the graphics
software industry.
Write a report to the Moon investment committee. Recommend one company’s shares over the
other. State the reasons for your recommendation.
Good Luck
Formula Sheet
Liquidity Ratios
Efficiency Ratios
Page 4 of 5
AAST Msc program
Student Name: Dr.Mohamed El-Deeb
Final-Term Exam-Spring 2022
Profitability Ratios
Market Ratios
Page 5 of 5