ARG Inc, is a manufacturer of dairy products that was formed three years ago by three sisters who, as directors, retain sole ownership of its ordinary share capital. One third of the initial share capital was provided by each sister. However, the company has managed to return a profit in each year of operation as shown in the financial statements. ARG Inc. has an overdraft limit of $3.2 million and pays interest on its overdraft at a rate of 6 percent (6) per year. The company currently has no long-term debt. Current liabilities consist of trade creditors and overdraft finance in each of the three years as follows: Year Overdraft (S'000) Trade creditors (S'000) Interest 2017 2018 2019 50 567 1167 1133 400 733 The industry averages for firms similar to ARG Inc. are Profit 9% Creditor days 70 days Net Margin Interest cover Stock days Debtor days 15 times 85 days 75 days Current ratio Quick ratio DEBT/Equity ratio 21 times 0.s times 40% (using Book value)

ARG Inc, is a manufacturer of dairy products that was formed three years ago by three sisters who, as directors, retain sole ownership of its ordinary share capital. One third of the initial share capital was provided by each sister. However, the company has managed to return a profit in each year of operation as shown in the financial statements. ARG Inc. has an overdraft limit of $3.2 million and pays interest on its overdraft at a rate of 6 percent (6) per year. The company currently has no long-term debt. Current liabilities consist of trade creditors and overdraft finance in each of the three years as follows: Year Overdraft (S'000) Trade creditors (S'000) Interest 2017 2018 2019 50 567 1167 1133 400 733 The industry averages for firms similar to ARG Inc. are Profit 9% Creditor days 70 days Net Margin Interest cover Stock days Debtor days 15 times 85 days 75 days Current ratio Quick ratio DEBT/Equity ratio 21 times 0.s times 40% (using Book value)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

why it is important for companies to follow standards in financial reporting?
Any difference in the financial statements for financial firms compared to non financial firms?
2
What is the importance of Financial Analysis and Reporting to the current and future financial health of a company? Why is it vital?
What is the role of the Finance Manager of a company? What is their biggest value to a company? How to Financial managers use Balance Sheet information? How would the finance manager use financial ratios in their job?
The following sentence should be explained: The balance sheet is a snapshot of a company's financial condition at a certain moment in time, while the income statement is a long-term view of a company's financial performance.
how do you calculate earnings per share? how to find information to calculate earnings per share from a companies business report?
What types of information do common-size financial statements reveal about the firm? What is the best use for these common-size statements?
"What are the main components of a company's balance sheet, and how do they provide insight into the company's financial position?"
What are the benefits of comparing a firm’s current financial information withinformation for previous accounting periods, with industry averages, and withfinancial information for competitors?