ACC600 Accounting Fundamentals Management

Running head: ACCOUNTING FUNDAMENTALS
Accounting fundamentals
Name of the student
Name of the university
Student ID
Author note

1ACCOUNTING FUNDAMENTALS
Table of Contents
Answer 1....................................................................................................................................2
Answer 2....................................................................................................................................5
Answer 3....................................................................................................................................7
Answer 4....................................................................................................................................9
Answer 5..................................................................................................................................10
Reference..................................................................................................................................13

2ACCOUNTING FUNDAMENTALS
API Limited or the Australian Pharmaceutical Limited is the parent company of Soil
Pattinson Chemist and Pharmacist Advice and Priceline Pharmacy. Various services provided
by the company include the delivery of wholesale products, marketing programs, advisory
services for business and retail services (API, 2018). Nick Scali Limited along with its
subsidiaries is engaged in retailing and sourcing the household furniture and associated
accessories all over New Zealand and Australia. It provides chairs, dining tables, lounges,
coffee tables, TV Units, rugs, pendants, mirrors and lamps. It sells its product through
physical stores as well as through online (Nickscali.com.au, 2018). JB Hi FI is engaged in
retailing of the home consumer products. It has 2 segments – New Zealand and Australia. It is
engaged in selling the consumer electronic services and goods that includes audio equipment,
televisions, software, computer, compact discs, blue rays and digital versatile discs
(Jbhifi.com.au, 2018). The Reject shop Limited is engaged in discount variety retail shops all
over Australia. Various products the company deals with include hardware, basis furniture,
home wares, confectionary, kitchenware, household cleaning products and snack foods
(Rejectshop.com.au, 2018). Super Retail Group Limited is engaged in retail industry
primarily. Main activities of the company includes retailing of the auto accessories and parts,
equipments, tools, camping, retailing of the boating, fishing equipment, apparel, bicycles and
retailing equipment (Superretailgroup.com.au, 2018). Blackmores Limited is engaged in
selling, developing and marketing natural health products for animals as well as humans all
over New Zealand, Australia and Asia. It offers various products for different conditions
related to bones, joints, arthritis, brain health, muscles, flu, cold, immunity, exercise, energy
and digestive health (Blackmores.com.au, 2018).
Answer 1
Formula for computing ratios –

3ACCOUNTING FUNDAMENTALS
Ratio Formula
Net profit margin Net profit / sales
Current ratio Current assets/current liabilities
Inventory turnover Cost of goods sold/average inventory
Asset turnover ratio Net sales/average total assets
Leverage ratio Total liabilities/total assets
Return on equity Net profit/total equity
Return on total assetsNet profit/total assets
Earnings per share Given
Net debt to equity ratio Total liabilities / total equity
Total return to
shareholders
(Closing price of stock-opening price of stock + divided paid)/
opening price of stock
Ratio computation –
API Limited
2014-15 2015-16 2016-17
Net profit margin 0.01 0.01 0.01
Current ratio 1.28 1.33 1.32
Inventory turnover 8.51 8.64 8.78
Asset turnover ratio 2.63 2.75 2.80
Leverage ratio 0.62 0.63 0.62
Return on equity 0.09 0.10 0.09
Return on total assets0.03 0.04 0.04
Earnings per share 0.09 0.11 0.11
Net debt to equity ratio 1.66 1.70 1.62
Total return to shareholders1.41 0.35 -0.20
Nick Scali Ltd
2014-15 2015-16 2016-17
Net profit margin 0.11 0.13 0.16
Current ratio 1.64 1.58 1.56
Inventory turnover 2.84 3.20 3.16
Asset turnover ratio 1.77 1.87 1.79
Leverage ratio 0.52 0.53 0.50
Return on equity 0.37 0.45 0.53
Return on total assets0.18 0.21 0.27
Earnings per share 0.21 0.32 0.46
Net debt to equity ratio 1.09 1.10 0.99
Total return to shareholders0.33 0.60 0.42