at 31 December 2021 and 2020 before answering the following questions: Is the company in good financial health? Motivate your answer by referring to at least SIX(6) items on the statement. Ratios are not required. Calculate the ratios (expressed to two decimal places) that would reflect the following: A measure of the company’s ability to settle its short-term ob
REQUIRED
Study the
- Is the company in good financial health? Motivate your answer by referring to at least SIX(6) items on the statement. Ratios are not required.
- Calculate the ratios (expressed to two decimal places) that would reflect the following:
- A measure of the company’s ability to settle its short-term obligations within twelve
- A measure of the amount of total assets that are financed by creditors instead of investors
INFORMATION
Lomax Ltd commenced operations at the start of 2020 manufacturing only standard-sized bricks for the building industry. It’s financial position at the end of 2020 and 2021 is evident in the statements provided below:
INFORMATION
Lomax Ltd commenced operations at the start of 2020 manufacturing only standard-sized bricks for the building industry. It’s financial position at the end of 2020 and 2021 is evident in the statements provided below:
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LOMAX LTD |
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STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: |
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2021 |
2020 |
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R |
R |
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ASSETS |
|
|
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Non-current assets |
|
|
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Property, plant and equipment (Cost) |
? |
? |
|
|
(500 000) |
(365 000) |
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Carrying value |
? |
? |
|
Investments |
2 700 000 |
3 150 000 |
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Current assets |
|
|
|
Inventories |
193 500 |
29 000 |
|
|
1 300 000 |
1 100 000 |
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Cash |
235 000 |
194 500 |
|
|
6 500 000 |
6 680 000 |
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EQUITY AND LIABILITIES |
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|
|
Equity |
|
|
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Share capital |
745 000 |
630 000 |
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|
2 380 000 |
4 450 000 |
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Shareholders’ equity |
3 125 000 |
5 080 000 |
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Non-current liabilities |
|
|
|
Long-term loan |
2 580 000 |
880 000 |
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Current liabilities |
|
|
|
Accounts payable |
95 000 |
120 000 |
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Other current liabilities |
700 000 |
600 000 |
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|
6 500 000 |
6 680 000 |
Note
- There was no significant change in the sales figures over the two-year
- R240 000 of the long-term loan is expected to be repaid during
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