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 RatioAcid Test RatioTimes Interest Earned Ratio Standalone statement of financial positionAs at 31 December20192018NoteAEDAEDASSETSNon-current assetProperty and equipment41,012,9841,213,595Investments in subsidiaries1,343,5822,356,5662.21,213,595Current assetsInventories5,529,691193,441,50352,580,86333,455,65924,349,497309,357,213310,570,808Trade and other receivables6.Due from related partiesLoan to related parties179,413,089121,670,89280,115,25326,318,7391111Cash and bank balances7407,517,973409,874,539Total assetsEQUITY AND LIABILITIESEQUITYShare capitalRetained earningsTotal equity3,900,000358,743,2393,900,000279,803,469283,703,469362,643,239LIABILITIESNon-current liabilities252,073252,073Provision for employees' end of service benefits355,785355,785Current liabilitiesTrade and other payablesDue to a related partyBank borrowings101,123,52326,729,06419,022,92846,875,51547,231,300409,874,5396,079,56820,415,438120,26026,615,26626,867,339310,570,8081117Total liabilitiesTotal equity and liabilities Standalone statement of comprehensive incomeYear ended 31 December20192018NoteAEDAED967,215,339(862,141,258)105,074,081Revenue12813,481,889Cost of sales13(722,094,232)91,387,657Gross profitAdministrative and selling expenses14(30,183,413)978,095(27,340,230)11,221,861Other incomeReversal of/(provision for) impairment of tradereceivables15(7,716,272)67,553,0166.4,167,78380,036,546Operating profitFinance cost18(1,097,922)1,146(1,096,776)(545,088)3,548(541,540)Finance income18Finance cost - net18Profit for the year78,939,77067,011,476Other comprehensive income for the yearTotal comprehensive income for the year78,939,77067,011,476

Ratio analysis is very important technique of management accounting, in which decisions are being…

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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Kate is considering expanding and bringing in several employees. To do this she will need a larger facility and to purchase more equipment. Which means additional financing. Answer this: look at the financial statements as if you were a banker considering her for a loan comment on your findings and use calculations to support your answer.
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A new company, is being established to manufacture and sell an electronic tracking device:the Trackit. The owners are excited about the future profits that the business will generate. They have forecast that sales will grow to 2,600 Trackits per month within five months andwill be at that level for the remainder of the first year.The owners will invest a total of $250,000 in cash on the first day of operations (that is thefirst day of July). They will also transfer non-current assets into the company.Extracts from the company’s business plan are shown below.SalesThe forecast sales for the first five months are:Month Trackits (units)July 1,000August 1,500September 2,000October 2,400November 2,600The selling price has been set at $140 per Trackit. Sales receiptsSales will be mainly through large retail outlets. The pattern for the receipt of payment isexpected to be as follows:Time of payment % of sales…
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