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Assignment -MBA ACCU

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Assignment -MBA ACCU

Uploaded by

birahanewandu2022
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Harambe University

MBA Postgraduate Online Learning for section D

Accounting and Finance


2015 entry
CHEKOLE TADELE

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1. Suppose that XYZ cinema sells a single ticket by birr 25, variable cost per ticketis birr 15 and
total fixed cost is birr 48,000. Accordingly,
A. Calculate breakeven quantity and revenue using equation method andcontribution
margin approach and explain it graphically.
B. If XYZ Cinema desires to get Br 9000 profit, instead of operating at breakeven
point, how many tickets must be sold? What will be the revenue? Determine sales
level in quantity and birr using equation andcontribution margin approach.
C. Assume that XYZ Cinema has target profit after tax of birr 9,000 and the firm is
subject to a 40 percent income tax rate. What will be the target profit before tax? What
will be the required sales of ticket in units and birrto generate target profit after tax of
birr 9,000? Use equation and contribution margin approach in your calculation.
D. Make sensitivity analysis if marketing manager of the cinema proposed to increase
monthly advertising budget by 4,000 in order to increase monthly sales revenue by birr
13,000 at sales of 5,700 units .
E. Calculate margin of safety and safety as percentage of sales at sales of5,700 units

2. Financial statements of Ayantu PLC are presented below:


Ayantu PLC
Balance sheet
As at 30 June 2021 and 2022
($000)
2022 2021
Current assets
Cash and cash equivalents $1,645 $2,110
Accounts receivables (all trades) 4,100 3,675
Inventories 7,000 6,930
Total current assets 12,745 12,715
Non-current assets

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Property, plant and equipment 17,190 15,330
Total non-current assets 17,190 15,330
Total assets $29,935 $28,045

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Current liabilities
Payables $5,780 $5,990
Total current liabilities 5,780 5,990
Non-current liabilities
Interest-bearing liabilities 9,940 9,450
Total non-current liabilities 9,940 9,450
Total liabilities $15,720 $15,440
Equity
Share capital $7,700 $7,700
Retained earnings 6,515 4,905
Total equity $14,215 $12,605
Ayantu PLC
Income Statement
As at 30 June 2022
($000)

Revenues (net sales) $55,000


Less: cost of sales 35,100
Gross profit 19,900
Less: Expenses
Selling and distribution expenses 7,100
Administrative expenses 4,970
Finance costs 1,560
Total expenses 13,630
Profit before income tax 6,270
Income tax expense 1,908
$4,362
Profit

Required:
A. Calculate the following ratios for 2021. The industry average for similar businesses is
shown.
Industry average
1. Rate of return on total assets 22%
2. Profit margin 4%
3. Current ratio 2.5:1
4. Quick ratio (acid ratio) 1.3:1
5. Receivables turnover 13
6. Inventory turnover 6
7. Debt ratio 40%
8. Times interest earned 6
9. Assets turnover ratio 1.8
B. Given the above industry averages, comment on the company’s profitability, liquidity
and use of financial gearing.

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