Question

Company A and B

Statement of ComprehensiveIncome

For theyear ended, December 31,2020

-(netsales(Company A) - 1,703,960.50

-netsales(Comapny B) - 372,941.80

-cost of sales(Company A) - 1,188,539.00

-cost of sales(Company B) - 265,100.00

-sellingExpenses(Company A) - 332,502.50.

-sellingExpenses(Company B) - 86,900.00

-General&AdministrativeExpenses(Company A) - 59,950.00.

-General&AdministrativeExpenses(Company B 7,315.00

-InterestExpenses(Company A) - 9,878.00.

-InterestExpenses(Company B) - 2,477.20

-NetIncome(Company A) - 113,091.00.

-NetIncome(Company B) - 11,149.60

Answer the following:

1. Compute for the profitability ratios of Company A and B.

2. Compute for operational ratios of company A and B.

3. Compute for the financialhealth ratios of CompanyA and B.

Answer 1

1] Net profit Margin A = Net profit/Total sales

$A = 113,091/1703960.50 *100 = 6.64$ %

$B= 11,149.60/372,941.80 = 3$ %

2] Operating ratio = operating expenses/net sales

$A = (332502.50+59950)/1703960.50$

$A= 392,452.50/1,703,960.50*100$

$A= 23.03$ %

$B= (86,900+7,315)/372,941.80$

$B=94,215/372,941.80*100$

$B= 25.26$ %

3] Debt to Income ratio = Debt / Net income *100

$A= 9,878/113,091*100$

$A=8.74$ %

$B=2,477.20/11,149.60*100$

$B= 22.22$ %