ACC501 Business Finance assignment no 1 spring fall 2011

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[B]UESTION # 01[/B]
In this question you are required to make time series analysis for Crestex company for the years 2009 and 2010
Calculate the three ratios by applying following formulae for both years 2009 and 2010 separately and then compare which year was more profitable for the company by interpreting the equation


Total debt ratio = Total assets – Total equity / Total assets



Debt-equity ratio = Total Debt / Total equity


Interest coverage ratio = Earning before interest and taxes / Interest


From the data extracted from Balance sheet in annual reports of Crestex:

Total equity is (2010=2,672,439) (2009=2,261,837)

Total Assets are (2010=10,988,698 ) (2009=10,815,934)

Interest is (2010= ----) (2009= 22081)

Earning before interest and taxes (2010=463,491) (2009=238,518 )

Current liabilities (2010=6,010,688 ) (2009=5,805,685)

Current Assets (2010=4,202,903) (2009=4,085,672)

Inventory (2010=1,047,150) (2009=940,421)

Cash(2010=16,619) (2009=18,931)


QUESTION # 02


In this question you have to make cross company analysis for both the companies calculate following ratios for both companies

Current Ratio= current assets / Current liabilities



Quick (acid test) ratio = current assets – inventory / Current liabilities



Cash ratio= Cash /Current liabilities


Use above data for Crestex and following is the data for KTM

From the data extracted from Balance sheet in annual reports of KTM:

Current liabilities are (2010=8,169,138 ) (2009=6,672,527)

Current Assets are (2010=5,903,185) (2009=4,530,22)

Inventory is (2010=2,393,113) (2009=1,779,826)

Cash (2010=78,851) (2009=80,297)


After calculating the ratios show which company is in better condition by showing current financial position