Mr A. Makebe owns a sugarcane farm in the Mpumalanga sugar belt. As his financial advisor, it is your job to monitor changes in the financial structure of his operations over time. He presents you with his Balance Sheets for the 201X and 201Y seasons. In addition, he informs you that Net Farm Income for 201X was R256 000 while interest charges on loans totaled R150 000. Corresponding figures for 201Y were R1 060 000 and R238 000, respectively. Use ratio analysis to compute the following financial ratios from the data that he has provided: A. Solvency measures: i. Net capital ratio ii. Leverage ('gearing") ratio. iii. Own capital ratio B. Liquidity measures: i. Current ratio ii. Acid test ratio (assume livestock and supplies cannot be converted to cash immediately) iii. Intermediate (medium-term) ratio

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section: Chapter Questions
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Mr A. Makebe owns a sugarcane farm in the Mpumalanga sugar belt. As his financial
advisor, it is your job to monitor changes in the financial structure of his operations over
time.
He presents you with his Balance Sheets for the 201X and 201Y seasons. In addition, he
informs you that Net Farm Income for 201X was R256 000 while interest charges on
loans totaled R150 000. Corresponding figures for 201Y were R1 060 000 and R238 000,
respectively.
Use ratio analysis to compute the following financial ratios from the data that he has
provided:
A. Solvency measures:
i. Net capital ratio
ii. Leverage ('gearing") ratio.
iii. Own capital ratio
B. Liquidity measures:
i. Current ratio
ii. Acid test ratio (assume livestock and supplies cannot be converted to cash
immediately)
iii. Intermediate (medium-term) ratio
Transcribed Image Text:Mr A. Makebe owns a sugarcane farm in the Mpumalanga sugar belt. As his financial advisor, it is your job to monitor changes in the financial structure of his operations over time. He presents you with his Balance Sheets for the 201X and 201Y seasons. In addition, he informs you that Net Farm Income for 201X was R256 000 while interest charges on loans totaled R150 000. Corresponding figures for 201Y were R1 060 000 and R238 000, respectively. Use ratio analysis to compute the following financial ratios from the data that he has provided: A. Solvency measures: i. Net capital ratio ii. Leverage ('gearing") ratio. iii. Own capital ratio B. Liquidity measures: i. Current ratio ii. Acid test ratio (assume livestock and supplies cannot be converted to cash immediately) iii. Intermediate (medium-term) ratio
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