Expert Answers to Your Questions

Finding Expert Answers

a) Calculate the, the Payback Period, and the net Present Value of for each project.  

b) For each of the above methods of project appraisal recommend which project should be taken up.

c) Using all the information gathered from the above techniques which project would you recommend giving the reasons for this decision.  

d) Explain the uses, limitations and merits of the Payback Period compared to Net Present Value in investment appraisal.                                                           

(a) You are required to calculate the following ratios:

(i) Gross profit margin

(ii) Operating profit margin

(iii) Expenses to sales

(iv) Return on Capital Employed

(v) Asset turnover

(vi) Non-current asset turnover

(vii) Current Ratio

(viii) Quick Ratio

(ix) Inventory days

(x) Receivables days

(xi) Payable days

(xii) Interest cove

(b) In light of your calculations comment on the performance of the company over the last two years.

Question 3

Smith plc manufactures one product, and the entire product is sold as soon as it is produced. There are no opening or closing inventories and work in progress is negligible. The company operates a standard costing system and analysis of variances is made every month. The standard cost card for a product is as follows.

Direct Materials   

Direct Wages