60.1K

Verified Solution

Link Copied!

UTS Ltd has provided you with the following information:

Class of business	Turnover	Turnover	Operating	Operating
			profit	profit
	2020	2019	2020	2019
	000	000	000	000
Corporate Logistics	5,400	6,300	700	950
Household products	5,500	18,900	580	600
Home deliveries	900	1563	220	210
	11,800	26,763	1,500	1,760
Geographical area	2020	2019	2020	2019
	000	000	000	000
Asia	1,900	13,500	610	840
Continental Europe	3,600	4,650	150	250
UK	6,300	8,613	740	670
	11,800	26,763	1,500	1,760

Required

1. Discuss reasons why segmental information is important?

Your answer to this part of the question should not be more than 120 words.(4 marks)

2. Calculate the operating profit ratio for UTS Ltd for 2019 and 2020, for each class of business and for each geographical area. (4 marks)

3. Analyze segmental information for UTS Ltd using the results in part b.

Your answer to this part of the question should not be more than 180 words.(6 marks)

4. Discuss two reasons why companies might chose to raise finance using long term debt.

How would the gearing ratio and the net profit ratio be affected if a company replaced part of its equity with debt, all other things remaining the same?

Your answer to this part of the question should not be more than 180 words.(6 marks)

Answer & Explanation Solved by verified expert

See Answer