For further query you can Contact Us :

msa@msahomeworkhelp.com
MSA Homework Help

Answer

Financial Accounting

$14.99


QUESTION THREE [25] Thomas Ltd is a spare parts agent for motorcycles in Tshwane, South Africa. The company commenced operations at the beginning of the 2010 year. Although being profitable, the business is experiencing cash flow problems. The financial director has approached you for advice in order to remedy this situation. The following amounts for the current (2015) and comparative years were extracted from the records of the company: 2014 R’000 2015 CURRENT Turnover (all sales on credit) 220 000 250 000 Cost of sales 150 000 165 000 Profit before interest and tax 11 000 10 500 Accounts receivable 25 000 29 600 Accounts payable 14 700 17 000 Inventory 26 000 30 400 Bank/ (overdraft) (1000) (2 000) Required: 3.1 Outline the purpose of financial statement analysis (3) 3.2 Calculate the following ratios for each year: 3.2.1 Accounts receivable (debtors) collection period 3.2.2 Inventory holding period 3.2.3 Accounts payable (creditors) payment period 3.2.4 Current ratio 3.2.5 Acid test ratio (10) 3.3 Evaluate the company‘s working capital management in light of the above calculations. (12)