Answer :
Final answer:
The question aims to calculate various risk ratios related to sales on account but does not provide the necessary financial data. Examples of such ratios include accounts receivable turnover and days sales outstanding, which assess a company's management of credit and receivables.
Explanation:
The question pertains to calculating various risk ratios for hypothetical sales data on account for the years 2024 and 2025. However, there is not enough information provided to calculate these ratios. In general, risk ratios such as the accounts receivable turnover ratio or days sales outstanding (DSO) could be calculated if we had the figures for net credit sales and average accounts receivable.
For example, if we wanted to calculate the accounts receivable turnover ratio, we would use the formula: Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable. Meanwhile, the DSO can be calculated using the formula: Days Sales Outstanding = (Average Accounts Receivable / Net Credit Sales) x Number of Days in the Period. Both metrics help assess how effectively a company is managing its accounts receivable and its credit policies.
The hint about using time estimates in Section 1.2 refers to adjusting project times by a factor of the risk involved, but without the specific time estimates or the precise context of the risk, this cannot be applied. Similarly, market concentration measures like the CR4 and CR8 ratios reflect industry competition but are unrelated to the calculation of risk ratios for sales on account unless the concentration affects credit policies and risk assessments.
Without specific financial details, calculating Henry's accounting and economic profits, or determining an appropriate discount rate for future cash flows, is also not feasible. However, it's worth noting the difference between accounting profit, which is simply revenues minus explicit costs, and economic profit which also considers opportunity costs, such as the potential earnings from the next best alternative investment.
