3.1 What was the total value of the assets on 31 January 20x1? 3.2 What was the total value of the liabilities on 3 January 20x1? 3.3 What was the owners’ capital on 3 January 20x1?
QUESTION 1
The following ratios have been taken from the books of Enzokuhle Ltd over the past
three years of trading, together with the relevant industry averages:
Ratio 20x0 20x1 20x2 Industry average
- Days' inventory on hand 30 days 40 days 65 days 35 days
- Debtor’s collection period 60 days 90 days 120 days 60 days
- Gross margin 33% 50% 66% 45%
- Return on equity 15% 20% 24% 18%
1.1 What does the ratio measure?
1.2. State whether there is an improvement or decline in the ratio, in comparison
with the industry average.
1.3. If you were considering investing in Enzokuhle Ltd, which of the above ratios would you be interested in and why?
QUESTION 2
The following information was taken from the books of DCW Ltd:
31/12/20x4 31/12/20x3
Rands Rands
Inventory 160 000 130 000
Purchases 775 000 690 000
Trade and other payables 210 160 124 224
Investments 70 000 70 000
Furniture 45 000 70 000
Vehicles 85 000 40 000
Sales 910 000 760 000
Customs and excise 40 000 35 000
Net income before interest and
Bank overdraft 51 320 60 000
Trade and other receivables 131 110 110 810
ADDITIONAL INFORMATION:
R 7 000 interest was paid during the year, while no interest was received.
All purchases are on credit and 25% of the sales are for cash.
Assume 360 working days per annum.
Calculate the following for the year ended 31 December 20x4:
2.1Net profit before interest and tax margin (round off to two decimal places).
2.2 Debtors’ collection period (round off to the nearest whole number).
2.3 Acid test ratio (round off to two decimal places).
2.4 Cost of Sales.
2.5 Gross margin (round off to two decimal places).
2.6 Days’ inventory on hand (round off to the nearest whole number).
QUESTION 3
An undertaking called Blue Enterprises was formed on 3 January 20x1, on which date the owner invested R80 000 in the business and borrowed R100 000 from Strand Bank.
During the month of January 20x1 the enterprise acquired the following assets:
Cash at bank R60 000 and a motor vehicle that cost R110 000.
3.1 What was the total value of the assets on 31 January 20x1?
3.2 What was the total value of the liabilities on 3 January 20x1?
3.3 What was the owners’ capital on 3 January 20x1?
3.4 Compile an
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