b. Comment on each of the ratios calculated in part (a). ABOVE IS THE QUESTION THAT I NEED ANSWER, BELOW IS THE QUESTION (A) ANSWER THAT MENTIONED IN QUESTION (B) a) Calculate the following ratios for Company A and Company B. State clearly the formulae used for each ratio: ANSWER iv) Receivables Collection Period (days) Receivables Collection Period (days) = ( Receivables / Net sales ) x 365 days Company A: = ( 6000 / 160000 ) x 365 = 13.68 Days Company B: = ( 20000 / 240000 ) x 365 = 30.41 Days v) Payables Payment Period (days) Company A: Payables payment period= * 365 Accounts payable= RM 10,000 Cost of sales= RM120,000 Payable payment period= *365 = 30.42 days Company B: Accounts payable= RM 20,000 Cost of sales= RM 180,000 Payable payment period= *365 = *365 = 40.55 days vi)Current Ratio Company A Current ratio= Current assets= RM 40,000 Current liabilities= RM 10,000 Current ratio= = 4 times. Company B Current assets= RM 80,000 Current liabilities= RM 20,000 Current ratio= = = 4 times vii)Quick Ratio Company A Quick ratio= Bank= RM 4000 Receivables= RM 6000 Accounts payable= RM 10,000 Quick ratio= = 1 times. Company B Bank= RM 10,000 Receivables= RM 20,000 Accounts payable= RM 20,000 Quick ratio= = = 1.5 times
b. Comment on each of the ratios calculated in part (a).
ABOVE IS THE QUESTION THAT I NEED ANSWER, BELOW IS THE QUESTION (A) ANSWER THAT MENTIONED IN QUESTION (B)
a) Calculate the following ratios for Company A and Company B. State clearly the formulae used for each ratio:
ANSWER
iv) Receivables Collection Period (days)
Receivables Collection Period (days) = ( Receivables / Net sales ) x 365 days
Company A:
= ( 6000 / 160000 ) x 365
= 13.68 Days
Company B:
= ( 20000 / 240000 ) x 365
= 30.41 Days
v) Payables Payment Period (days)
Company A:
- Payables payment period= * 365
Accounts payable= RM 10,000
Cost of sales= RM120,000
Payable payment period= *365
= 30.42 days
Company B:
- Accounts payable= RM 20,000
Cost of sales= RM 180,000
Payable payment period= *365
= *365
= 40.55 days
- vi)
Current Ratio
Company A
Current ratio=
Current assets= RM 40,000
Current liabilities= RM 10,000
Current ratio=
= 4 times.
Company B
Current assets= RM 80,000
Current liabilities= RM 20,000
Current ratio=
=
= 4 times
- vii)Quick Ratio
Company A
Quick ratio=
Bank= RM 4000
Receivables= RM 6000
Accounts payable= RM 10,000
Quick ratio=
= 1 times.
Company B
Bank= RM 10,000
Receivables= RM 20,000
Accounts payable= RM 20,000
Quick ratio=
=
= 1.5 times
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