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2)1 Consider the following information for SCE Enterprises (for 10 000 units of output) and calculate the total cost for 35 000 unit of output, as well as the cost per unit
2)1 Consider the following information for SCE Enterprises (for 10 000 units of output) and calculate the total cost for 35 000 unit of output, as well as the cost per unit. Variable cost: R85 000 Fixed cost: R40 000 Semi-variable cost (30% fixed): 95 000 (9)
2)2 SPP Enterprises provide you with the following information: Total liabilities: R 3000 000 Total assets: R4 200 000 8% preference shares: R250 000 Net profit after tax: R280 000 Use the information provided and calculate the: • Return on total equity ratio • Return on common equity ratio. (9)
2)3 Obtain the financial statements (annual report) of any two listed companies and critically assess the liquidity and profitability of the two companies. The following is required: • Detailed introduction of your chosen companies (i.e. nature of their business activities) • Identify two ratios (show formulas) that will enable you to assess the liquidity of the chosen companies • Identify two ratios (show formulas) that will enable you to assess the profitability of the chosen companies • Calculation of two liquidity ratios per company • Calculation of two profitability ratios per company • Overall assessment of the two companies in terms of the ratios calculated (i.e. compare the two companies in terms of liquidity and profitability) Be sure to attach all supporting document such as the statements that were used for calculation purposes.
Expert Solution
1).Computation of cost of 35000 units of output
| A | B | C | D | |
| 1 | Particular | Number of units | Amount | Amount per unit |
| 2 | Variable cost | 10000 | 85000 | 8.5 |
| 3 | Fixed cost | 10000 | 40000 | 4 |
| 4 | Semi variable | |||
| 5 | Variable cost | 10000 | 66500 | 6.65 |
| 6 | Fixed cost | 10000 | 28500 | 2.85 |
| 7 | Total cost | 10000 | 220000 | 22 |
| 8 | Variable cost | 35000 | 297500 | 8.5 |
| 9 | FIxed cost | 35000 | 40000 | 1.142857143 |
| 10 | Semi variable | |||
| 11 | Variable cost | 35000 | 232750 | 6.65 |
| 12 | Fixed cost | 35000 | 28500 | 0.814285714 |
| 13 | Total cost | 35000 | 598750 | 17.10714286 |
| A | B | C | D | |
| 1 | Particular | Number of units | Amount | Amount per unit |
| 2 | Variable cost | 10000 | 85000 | =C2/B2 |
| 3 | Fixed cost | 10000 | 40000 | =C3/B3 |
| 4 | Semi variable | |||
| 5 | Variable cost | 10000 | =95000*70% | =C5/B5 |
| 6 | Fixed cost | 10000 | =95000-C5 | =C6/B6 |
| 7 | Total cost | 10000 | =SUM(C2;C6) | =C7/B7 |
| 8 | Variable cost | 35000 | =B8*D2 | =C8/B8 |
| 9 | FIxed cost | 35000 | C3 | =C9/B9 |
| 10 | Semi variable | |||
| 11 | Variable cost | 35000 | =B11*D5 | =C11/B11 |
| 12 | Fixed cost | 35000 | =C6 | =C12/B12 |
| 13 | Total cost | 35000 | =SUM(C8;C12) | =C13/B13 |
______________________________________________________________
2)
As per accounting equation ,Total assets = Total liabilities +Total equity.
Total equity is = Total assets - Total liabilites
Total equity is = (4200000-3000000)
Total equity is = R 1,200,000/-
Return on total equity is = (Net profit after tax/Total equity)*100
Return on total equity is = (280000/1200000)*100
Return on total equity is =23.33%
Common equity is = Total equity-Preferance share capital
Common equity is = (1200000-250000)
Common equity is = R 950,000/-
Return on common equity = (Net profit after tax/Total common equity)*100
Return on common equity=(280000/950000)*100
Return on common equity = 29.47%
______________________________________________________________
3)Obtain the financial statements (annual report) of any two listed companies and critically assess the liquidity and profitability of the two companies. The following is required:
• Detailed introduction of your chosen companies (i.e. nature of their business activities)
• Identify two ratios (show formulas) that will enable you to assess the liquidity of the chosen companies
• Identify two ratios (show formulas) that will enable you to assess the profitability of the chosen companies
• Calculation of two liquidity ratios per company • Calculation of two profitability ratios per company
• Overall assessment of the two companies in terms of the ratios calculated (i.e. compare the two companies in terms of liquidity and profitability)
Be sure to attach all supporting document such as the statements that were used for calculation purposes.
Answer:
Financial statement of Chegg,Inc.Vs.Bright Hoorizons Family Solution Inc.
1.Detailed introduction of companies Chegg , Inc . and Bright Horzions Family Inc.
| CHEGG,INC | .Bright Hoorizons Family Solution Inc |
|
Chegg ,Inc.operates direct-to-student learinig platform that supports students on their journey from high school to college and in to their carrer with tools designed to help them pass their test , pass their class , and save money on required materials. The company offers Chegg services , which includes digital product and services ;and required materials .That comapnies its print text books and etextbooks.its digital product andservices include Chegg study , which helps students master challenging concepts on their own;Chegg writing that enable genertae sources in the required formats , when student need to cite thier sourcesin written wroks ;Chegg that allow students find human help on its learning platform through a network of live chegg Math solevr , a step-by-step math problem solver , a solver and aclaculator that helps student to solve problems and think full,a skills -Based learning platform that offers professional courses in the areas software engineer data sceince,data analytics, productdesign and product management directly to students. The company also provides other services,Such aschegg prep and internships , college admission and scholarship services ;rents and sells print textbook and etextbooks;and offers supplment materials.chegg,inc . was founded in 2005 and is headquartered in santa clara, california. |
.Bright Hoorizons Family Solution Inc. provides child car and early education services ,back-up care services educational advisory services and other workplace solutions for employers and families.the company operates through three segment ;full services center -Based child care,back up care and services educational advisory services.The full service center based child care segment offers traditional center based child care,pre school , AND ELEMENTARY EDUCATION services. the back up care segment provides cener based back up child care, and in-home child and adult /elder dependent care services THE EDUCATIONAL ADVISORY SERVICES segment offers tution assistances and student loan repayment program administartion, and related educational consulting services,as well as college admisiions advisory services , As of december 31,2019. it operated 1084 child acre and early educatioon centers in the united states, Puerto Rico,the United kingdom,Canada,the Nether lands, and india.The company was formelly known as bright Horizons Solution Inc.in july 2012, Brigtly Horizons Family solutions Inc ,.IN july2012 .Bright Horizons Family SOLUTIONS inc was foynded in 1986 and is headquarters in watertown Massachusetts. |
________________________________________________________________________________________
2)
Identify two ratios (show formulas) that will enable you to assess the liquidity of the chegg.inc.and Bright Hoorizons Family Solution Inc.
- Current ratio
- Qucik ratio
Current Ratio = Current Assets/Currents Liabilities
Quick Ratio=[Cash equivalents+marketable securities+ accounts recievable]/Current liablities or,alternatively.
Quick Ratio= [Current Assets-investory-Prepaid expenses]/Currents Liabilities
___________________________________________________________
3. Identify two ratios (show formulas) that will enable you to assess the liquidity of the chegg.inc.and Bright Hoorizons Family Solution Inc.
- Return assets
- Return on capital
ROA= Net income /Total assets
ROIC is (net income-dividend)/(debt+equity)
___________________________________________________________
4)Calculation of two liquidity ratios of chegg.inc.and Bright Hoorizons Family Solution Inc.
Chegg.inc
|
12 months Dec-31-2015 |
12 months Dec - 31-2016 |
12 months Dec-31-2017 |
12 months Dec-31-2018 |
12 months Dec-31-2019 |
LTM 12 months sep-30-2020 |
|
| Short term Liquidity | ||||||
| Current Ratio | 2.4x | 1.7x | 4.4x | 8.3x | 11.3x | 9.1x |
| Quick Ratio | 2.3x | 1.6x | 4.3x | 8.1x | 11.0x | 8.8x |
Bright Hoorizons Family Solution Inc.
|
12 months Dec-31-2015 |
12 months Dec - 31-2016 |
12 months Dec-31-2017 |
12 months Dec-31-2018 |
12 months Dec-31-2019 |
LTM 12 months sep-30-2020 |
|
| Short term Liquidity | ||||||
|
Current Ratio [34012] |
0.5x | 0.4x | 0.4x | 0.4x | 0.5x | 1.2x |
|
Quick Ratio [34013] |
0.4x | 0.3x | 0.3x | 0.4x | 0.4x | 1.0x |
_____________________________________________________________________
5)Overall assessment of the two profitabilityratios chegg.inc.and Bright Hoorizons Family Solution Inc.
Chegg.inc
| Profitability |
12 months Dec-31-2015 |
12 months Dec - 31-2016 |
12 months Dec-31-2017 |
12 months Dec-31-2018 |
12 months Dec-31-2019 |
LTM 12 months sep-30-2020 |
|
RETRUN ON ASSETS% [33998] |
10.5% | 8.6% | 3.7% | 0.5% | 1.1% | 1.3% |
|
RETURN ON CAPITAL % [33999] |
13.4% | 11.1% | 4.5% | 0.5% | 1.2% | 1.4% |
Bright Hoorizons Family Solution Inc.
| Profitability |
12 months Dec-31-2015 |
12 months Dec - 31-2016 |
12 months Dec-31-2017 |
12 months Dec-31-2018 |
12 months Dec-31-2019 |
LTM 12 months sep-30-2020 |
|
RETRUN ON ASSETS% [33998] |
5.3% | 5.5% | 5.5% | 6.0% | 5.7% | 2.5% |
|
RETURN ON CAPITAL % [33999] |
6.8% | 7.1 % | 7.0% | 7.7% | 7.1% | 3.0% |
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