Peters Retailers Pty Income Statement compared with Industry Average For the yea

Question

Peters Retailers Pty Income Statement compared with Industry Average For the year ended 30th June 2016 Peters Industry Average Net sales Cost of sales Gross profit Selling and general expenses Other expenses Profit S972,500 653.520 318,980 201,308 5.835 100 658 34.2 19.7 Peters Retailers Pty Statement of financial Position compared with Industry Average as at 30h June 2016 Industry Average 70.9% Peters $406,800 Current assets Property, plant and equipment, net Intangible assets, net Other assets Total assets Current liabilities Non-current liabilities Shareholders' equity Total liabilities and shareholders' equity 151,200 23.6 10,800 0.8 31.200 4.7 600,000 100.00 48.1 16.6 187.200 353 278,400 134,400 1. Prepare a common-size income statement and statement of financial position for Peters. The first column of each statement should present Peters' common-size statement and the second column the industry averages. Compare Peters' gross profit percentage and rate of return on net sales with the industry averages. Is Peters' performance better or worse than the industry average? Compare Peters' current ratio and debt to equity ratios with the industry averages. Is Peters' performance better or worse than the industry average? 2. 3. (Marks: 17)

Explanation / Answer

1) The common size income statement and statement of financial position for has already there in the question. 2) Gross Profit of Peters = GP/Net Sales = 318980/972500= 0.328 Gross Profit of Industry = 0.342 Return on net sales of Peters = Net Income / Net Sales = 111837/972500 = 0.115 Return on net sales of Industry = 0.141 Peters performance is worse that to Industry average which is shown under both the ratios ie. Gross Profit or Net Profit. 3) Current ratio of Peters = CA / CL = 406800/278400 = 1.46 Current ratio of Industry= 70.9/48.1=1.47 Debt to Equity ratio of Peters = (278400+134400)/187200 = 2.21 Debt to Equity ratio of Industry = 48.1+16.6 / 35.3 = 1.83 The current liability coverage of the peters is equal to that of Industry. But the debt - equity ratio of Peters shows that the company is more riskier than the industry average.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.