Below is an incomplete Statement of Financial Position for a company at the end of 2020. ($’000) Current Assets Cash 6 Inventory 27 Prepayments 6 Non-Current Assets Property, Plant & Equipment 40 Accumulated Depreciation (4) ----- Total Assets ? Current Liabilities Suppliers Accounts Payable 12 Non-Current Liabilities Bank Loan ? ----- Total Liabilities 48 Equity Contributed Capital ? Retained Earnings 10 ----- Total Equity ? 1. Calculate the missing amounts for: i) Total Assets ii) Bank Loan iii) Contributed Capital iv) Total Equity Total current assets = 6,000+27,000+6,000= 39,000 Total fixed assets = 40,000-4,000= 36,000 Total Assets = 39,000+36,000= 75,000 Bank loan= 48,000-12,000 = 36,000 Assets = Liabilities+ equity 75,000= 48,000+ Equity Equity = 75,000-48,000= 27,000 Contributed capital = Equity- retained earnings Contributed capital = 27,000-10,000= 17,000 Total equity = 27,000 2. Calculate the Current ratio. Current Assets= 39,000 Current Liabilities= 12,000 Current Ratio= 39,000/12,000= 3.25 3. Calculate the Quick ratio. Quick assets= 39,000- 27,000-6,000= 6,000 Current Liabilities= 12,000 Quick Ratio= 6,000/12,000= 0.50 4. Calculate the Equity ratio. Equity ratio = Total Equity / Total Assets = 27000 / 75000 = 36% 5. If the cost of goods sold for 2020 was $87,000 and the inventory purchases was $88,000. Calculate the total inventory on hand at the beginning of 2020. Cost of goods sold = Beginning inventory + Purchases - Ending Inventory 87000 = Beginning inventory + 88000 - 27000 Beginning inventory = $26000 6. Calculate the Inventory Turnover ratio for 2020. Inventory turnover ratio = Cost of goods sold / Average inventory Cost of goods sold = 87000 Average inventory = (Beginning inventory + Ending inventory) / 2 = (26000 + 27000)/2 = 26500 Therefore, Inventory turnover ratio = 87000 / 26500 = 3.28 7. Hence or otherwise, calculate the Inventory Days for 2020. 8. Comment on your calculated answers for parts 2), 3), & 7)
Below is an incomplete
($’000)
Current Assets
Cash 6
Inventory 27
Prepayments 6
Non-Current Assets
Property, Plant & Equipment 40
-----
Total Assets ?
Current Liabilities
Suppliers Accounts Payable 12
Non-Current Liabilities
Bank Loan ?
-----
Total Liabilities 48
Equity
Contributed Capital ?
-----
Total Equity ?
1. Calculate the missing amounts for:
i) Total Assets
ii) Bank Loan
iii) Contributed Capital
iv) Total Equity
Total current assets = 6,000+27,000+6,000= 39,000
Total fixed assets = 40,000-4,000= 36,000
Total Assets = 39,000+36,000= 75,000
Bank loan= 48,000-12,000 = 36,000
Assets = Liabilities+ equity
75,000= 48,000+ Equity
Equity = 75,000-48,000= 27,000
Contributed capital = Equity- retained earnings
Contributed capital = 27,000-10,000= 17,000
Total equity = 27,000
2. Calculate the
Current Assets= 39,000
Current Liabilities= 12,000
Current Ratio= 39,000/12,000= 3.25
3. Calculate the Quick ratio.
Quick assets= 39,000- 27,000-6,000= 6,000
Current Liabilities= 12,000
Quick Ratio= 6,000/12,000= 0.50
4. Calculate the Equity ratio.
Equity ratio = Total Equity / Total Assets
= 27000 / 75000
= 36%
5. If the cost of goods sold for 2020 was $87,000 and the inventory purchases was $88,000. Calculate the total inventory on hand at the beginning of 2020.
Cost of goods sold = Beginning inventory + Purchases - Ending Inventory
87000 = Beginning inventory + 88000 - 27000
Beginning inventory = $26000
6. Calculate the Inventory Turnover ratio for 2020.
Inventory turnover ratio = Cost of goods sold / Average inventory
Cost of goods sold = 87000
Average inventory = (Beginning inventory + Ending inventory) / 2
= (26000 + 27000)/2
= 26500
Therefore, Inventory turnover ratio = 87000 / 26500
= 3.28
7. Hence or otherwise, calculate the Inventory Days for 2020.
8. Comment on your calculated answers for parts 2), 3), & 7)
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