The financial statements of Zetar plc are presented in Appendix C. The company’s complete annual report, including the notes to its financial statements, is available in the Investors section at www.zetarplc.com.

Instructions

Visit Zetar’s corporate website and answer the following questions from Zetar’s 2011 annual report.

(c) What is the approximate tax rate of Zetar’s “Tax on profit from continuing activities”?

Recently, it was announced that two giant French retailers, Carrefour SA and Promodes SA, would merge. A headline in the Wall Street Journal blared, “French Retailers Create New Wal-Mart Rival.” While Wal-Mart’s total sales would still exceed those of the combined company, Wal-Mart’s international sales are far less than those of the combined company. This is a serious concern for Wal-Mart, since its primary opportunity for future growth lies outside of the United States.

Below are basic financial data for the combined corporation (in euros) and Wal-Mart (in U.S. dollars). Even though their results are presented in different currencies, by employing ratios we can make some basic comparisons.

$$\begin{array}{lcc} &\textbf{Carrefour}&\textbf{Wal-Mart }\\ &\underline{\textbf{(in millions)}}&\underline{\textbf{(in millions)}}\\[5pt] \text{Sales revenue}&\text{\hspace{5pt}70,486}&\text{\hspace{5pt}256,329}\\ \text{Cost of goods sold}&\text{\hspace{5pt}54,630}&\text{\hspace{5pt}198,747}\\ \text{Net income}&\text{\hspace{10pt}1,738}&\text{\hspace{15pt}9,054}\\ \text{Total assets}&\text{\hspace{5pt}39,063}&\text{\hspace{5pt}104,912}\\ \text{Current assets}&\text{\hspace{5pt}14,521}&\text{\hspace{10pt}34,421}\\ \text{Current liabilities}&\text{\hspace{5pt}13,660}&\text{\hspace{10pt}37,418}\\ \text{Total liabilities}&\text{\hspace{5pt}29,434}&\text{\hspace{10pt}61,289}\\ \end{array}$$

Instructions

Compare the two companies by answering the following.

(c) Calculate the current ratio and debt to assets ratios for the two companies, and discuss their relative liquidity and solvency.

The financial statements of Zetar plc are presented in Appendix C. The company’s complete annual report, including the notes to its financial statements, is available in the Investors section at www.zetarplc.com.

Instructions

Visit Zetar’s corporate website and answer the following questions from Zetar’s 2011 annual report.

(b) Instead of “interest expense,” what label does Zetar use for interest costs that it incurs?

Lambert Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company’s fiscal year on November 30, 2014, these accounts appeared in its adjusted trial balance.

Accounts Payable                     $   26,800
Accounts Receivable                      17,200
Accumulated Depreciation—Equipment       68,000
Cash                                      8,000
Common Stock                             35,000
Cost of Goods Sold                      614,300
Freight-Out                               6,200
Equipment                               157,000
Depreciation Expense                     13,500
Dividends                                12,000
Gain on Disposal of Plant Assets          2,000
Income Tax Expense                       10,000
Insurance Expense                         9,000
Interest Expense                          5,000
Inventory                                26,200
Notes Payable                            43,500
Prepaid Insurance                         6,000
Advertising Expense                      33,500
Rent Expense                             34,000
Retained Earnings                        14,200
Salaries and Wages Expense              117,000
Sales Revenue                           904,000
Salaries and Wages Payable                6,000
Sales Returns and Allowances             20,000
Utilities Expense                        10,600

Additional data: Notes payable are due in 2018.

Instructions

(b) Calculate the profit margin and the gross profit rate.

Recently, it was announced that two giant French retailers, Carrefour SA and Promodes SA, would merge. A headline in the Wall Street Journal blared, “French Retailers Create New Wal-Mart Rival.” While Wal-Mart’s total sales would still exceed those of the combined company, Wal-Mart’s international sales are far less than those of the combined company. This is a serious concern for Wal-Mart, since its primary opportunity for future growth lies outside of the United States.

Below are basic financial data for the combined corporation (in euros) and Wal-Mart (in U.S. dollars). Even though their results are presented in different currencies, by employing ratios we can make some basic comparisons.

$$\begin{array}{lcc} &\textbf{Carrefour}&\textbf{Wal-Mart }\\ &\underline{\textbf{(in millions)}}&\underline{\textbf{(in millions)}}\\[5pt] \text{Sales revenue}&\text{\hspace{5pt}70,486}&\text{\hspace{5pt}256,329}\\ \text{Cost of goods sold}&\text{\hspace{5pt}54,630}&\text{\hspace{5pt}198,747}\\ \text{Net income}&\text{\hspace{10pt}1,738}&\text{\hspace{15pt}9,054}\\ \text{Total assets}&\text{\hspace{5pt}39,063}&\text{\hspace{5pt}104,912}\\ \text{Current assets}&\text{\hspace{5pt}14,521}&\text{\hspace{10pt}34,421}\\ \text{Current liabilities}&\text{\hspace{5pt}13,660}&\text{\hspace{10pt}37,418}\\ \text{Total liabilities}&\text{\hspace{5pt}29,434}&\text{\hspace{10pt}61,289}\\ \end{array}$$

Instructions

Compare the two companies by answering the following.

(b) Calculate the profit margin, and discuss the companies’ relative profitability