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ABC Inc. is a Corporation with a focus on Garment and textile manufacturing in the UAE. They are now looking to finance their new project, are looking for a bank to give them a loan. Calculate the following ratios for both 2018 and 2019, interpret and analyze them: Current Ratio Acid Test Ratio Times Interest Earned Ratio

ABC Inc. is a Corporation with a focus on Garment and textile manufacturing in the UAE. They are now looking to finance their new project, are looking for a bank to give them a loan. Calculate the following ratios for both 2018 and 2019, interpret and analyze them: Current Ratio Acid Test Ratio Times Interest Earned Ratio

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ABC Inc. is a Corporation with a focus on Garment and textile manufacturing in the UAE. They are now looking to finance their new project, are looking for a bank to give them a loan. Calculate the following ratios for both 2018 and 2019, interpret and analyze them:

  1. Current Ratio
  2. Acid Test Ratio
  3. Times Interest Earned Ratio
Standalone statement of financial position As at 31 December 2019 2018 Note AED AED ASSETS Non-current asset Property and equipment 4 1,012,984 1,213,595 Investments in subsidiaries 1,343,582 2,356,566 2.2 1,213,595 Current assets Inventories 5,529,691 193,441,503 52,580,863 33,455,659 24,349,497 309,357,213 310,570,808 Trade and other receivables 6. Due from related parties Loan to related parties 179,413,089 121,670,892 80,115,253 26,318,739 11 11 Cash and bank balances 7 407,517,973 409,874,539 Total assets EQUITY AND LIABILITIES EQUITY Share capital Retained earnings Total equity 3,900,000 358,743,239 3,900,000 279,803,469 283,703,469 362,643,239 LIABILITIES Non-current liabilities 252,073 252,073 Provision for employees' end of service benefits 355,785 355,785 Current liabilities Trade and other payables Due to a related party Bank borrowings 10 1,123,523 26,729,064 19,022,928 46,875,515 47,231,300 409,874,539 6,079,568 20,415,438 120,260 26,615,266 26,867,339 310,570,808 11 17 Total liabilities Total equity and liabilities
Transcribed Image Text:Standalone statement of financial position As at 31 December 2019 2018 Note AED AED ASSETS Non-current asset Property and equipment 4 1,012,984 1,213,595 Investments in subsidiaries 1,343,582 2,356,566 2.2 1,213,595 Current assets Inventories 5,529,691 193,441,503 52,580,863 33,455,659 24,349,497 309,357,213 310,570,808 Trade and other receivables 6. Due from related parties Loan to related parties 179,413,089 121,670,892 80,115,253 26,318,739 11 11 Cash and bank balances 7 407,517,973 409,874,539 Total assets EQUITY AND LIABILITIES EQUITY Share capital Retained earnings Total equity 3,900,000 358,743,239 3,900,000 279,803,469 283,703,469 362,643,239 LIABILITIES Non-current liabilities 252,073 252,073 Provision for employees' end of service benefits 355,785 355,785 Current liabilities Trade and other payables Due to a related party Bank borrowings 10 1,123,523 26,729,064 19,022,928 46,875,515 47,231,300 409,874,539 6,079,568 20,415,438 120,260 26,615,266 26,867,339 310,570,808 11 17 Total liabilities Total equity and liabilities
Standalone statement of comprehensive income Year ended 31 December 2019 2018 Note AED AED 967,215,339 (862,141,258) 105,074,081 Revenue 12 813,481,889 Cost of sales 13 (722,094,232) 91,387,657 Gross profit Administrative and selling expenses 14 (30,183,413) 978,095 (27,340,230) 11,221,861 Other income Reversal of/(provision for) impairment of trade receivables 15 (7,716,272) 67,553,016 6. 4,167,783 80,036,546 Operating profit Finance cost 18 (1,097,922) 1,146 (1,096,776) (545,088) 3,548 (541,540) Finance income 18 Finance cost - net 18 Profit for the year 78,939,770 67,011,476 Other comprehensive income for the year Total comprehensive income for the year 78,939,770 67,011,476
Transcribed Image Text:Standalone statement of comprehensive income Year ended 31 December 2019 2018 Note AED AED 967,215,339 (862,141,258) 105,074,081 Revenue 12 813,481,889 Cost of sales 13 (722,094,232) 91,387,657 Gross profit Administrative and selling expenses 14 (30,183,413) 978,095 (27,340,230) 11,221,861 Other income Reversal of/(provision for) impairment of trade receivables 15 (7,716,272) 67,553,016 6. 4,167,783 80,036,546 Operating profit Finance cost 18 (1,097,922) 1,146 (1,096,776) (545,088) 3,548 (541,540) Finance income 18 Finance cost - net 18 Profit for the year 78,939,770 67,011,476 Other comprehensive income for the year Total comprehensive income for the year 78,939,770 67,011,476
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