Solution-Explain briefly the terms profitability

Explain briefly the terms profitability

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Reference no: EM132467738

	Harvey Co.		Jenny Co.
Current Assets	S S		S S
Cash	18,000		1.900
Accounts	21,100		14.700
Inventory	18,500		6,700
Total Current Assets		57,600		23.3110
Non-Current Assets
Long-term financial assets	167,000		64.000
Property, plant and	123,400		65.000
Total Non-Current Assets		290,400		129,000
TOTALASSETS		348,000		152.300
Current Liabilities
Accounts payable	18,000		11,600
Notes payable	10,000		10,000
Total Current Liabilities		28,000		21.&00
!fin-Currait Liabilities Bank loan (repayable in 3 years)		80.000		68.000
TOTAL LIABILTIES		108,000		89.600
EQUITY
Capital		240,000		62,700
		348,000		152.300

Sales (all credit sales)

Less: Cost of sales

Gross Profit

Less: Operating expenses

Net Profit

Harvey Co.
S

420,000
278.000

Jemmy Co.

135,000

100.000

142.000

88,000

33.000
28 000

34,000

7 000

Question (a) Calculate the following ratios for the two firms: (round the answers to 2 decimal places.)

(i) Gross profit ratio
(ii) Net profit ratio
(iii) Working capital
(iv) Current ratio
(v) Acid test ratio
(vi) Accounts receivable turnover
(vii) Inventory turnover ratio
(viii) Debt ratio

Question (b) Explain briefly the terms (i) profitability, (ii) liquidity and (iii) solvency.

Question (c) Based on the ratios calculated in (a), comment on the (i) profitability and (ii) liquidity of the two firms.

Reference no: EM132467738

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Explain briefly the terms profitability

Reference no: EM132467738

Reference no: EM132467738

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