Question 4 The statement of profit or loss and the balance s

Question 4 The statement of profit or loss and the balance sheet for MobileNet are presented below MobileNet Balance sheet as at 30 June 2016 $20000 5 000 Current assets Property, plant and equipment Intangible assets Total assets $72000 $ 9000 16 000 $25 000 Current liabilities Long-term liabilities Total liabilities Owner\'s equity M. Phone - capital Total liabilities & owner\'s equity 47 000 $72000 Statement of profit or loss for the year ended 30 June 2016 Sales revenue Cost of sales Gross profit Operating expenses $45000 20000 25000 18000 s 7000 a) Calculate the following i, the current ratio ii. the return on assets (use year-end figures ignore income tax and interest) ii the return on shareholders\' funds (owner\'s equity; use year-end figures) iv. the debt to equity ratio, b) Prepare a presentation on the financial analysis conducted, commenting on the performance and position of MobileNet.

Solution

1 Current ratio = Current assets / current Liabilities Current assets 20000 Current liabilities 9000 Current ratio 2.22 2 Return on assets = net income / total assets Net income 7000 Total assets 72000 Return on assets 9.7% 3 Return on shareholders fund = net income / Shareholders fund Net income 7000 Shareholders fund 47000 Return on shareholders fund 14.9% 4 Debt to equity = total debt/ Shareholders fund Total debt 25000 Shareholders fund 47000 Debt to equity 0.53