QUESTION 5 REQUIRED 5.1 Use the information provided below to calculate the following ratios for 2019. Where applicable, round off answers to two decimal places. Inventory turnover period Trade receivables period Trade payables period Return on capital employed Current ratio Acid-test ratio 5.2 Comment briefly but meaningfully on your answers in question 5.1 to the following ratios. The ratios for 2018 are provided in brackets. Inventory turnover period (2018: 45.67 days) Trade receivables period (2018: 29.46 days) Return on capital employed (2018: 23.67%) Current ratio (2018: 1.20:1) INFORMATION Excerpts of financial data of Virgo Limited for 2019 are as follows: INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2019 R Cost of sales Gross profit Operating profit Interest expense 2 200 000 1 050 000 332 000 67 500 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: 2019 2018 R. R Assets Non-current assets 1980 000 1 600 000 Inventories 300 000 500 000 Accounts receivable 388 000 350 000 Cash 184 000 50 000 2 852 000 2 500 000 PROGRAMME HANDBOOK: JULY 2020 INTAKE MANCOSA: POSTGRADUATE DIPLOMA IN PROJECT MANAGEMENT Equity and liabilities Ordinary share capital Retained earnings 704 000 600 000 806 000 420 000 480 000 700 000 Long-term loan (15% p.a.) Accounts payable Other current liabilities 450 000 300 000 442 000 450 000 2 852 000 2 500 000 Additional information All purchases and sales of inventories were on credit. Purchases for the year ended 31 December 2019 amounted to R2 000 000. 1. Credit terms are as follows: 2.1 Debtors: 30 days 2.2 Creditors: 90 days 2.
QUESTION 5 REQUIRED 5.1 Use the information provided below to calculate the following ratios for 2019. Where applicable, round off answers to two decimal places. Inventory turnover period Trade receivables period Trade payables period Return on capital employed Current ratio Acid-test ratio 5.2 Comment briefly but meaningfully on your answers in question 5.1 to the following ratios. The ratios for 2018 are provided in brackets. Inventory turnover period (2018: 45.67 days) Trade receivables period (2018: 29.46 days) Return on capital employed (2018: 23.67%) Current ratio (2018: 1.20:1) INFORMATION Excerpts of financial data of Virgo Limited for 2019 are as follows: INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2019 R Cost of sales Gross profit Operating profit Interest expense 2 200 000 1 050 000 332 000 67 500 STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER: 2019 2018 R. R Assets Non-current assets 1980 000 1 600 000 Inventories 300 000 500 000 Accounts receivable 388 000 350 000 Cash 184 000 50 000 2 852 000 2 500 000 PROGRAMME HANDBOOK: JULY 2020 INTAKE MANCOSA: POSTGRADUATE DIPLOMA IN PROJECT MANAGEMENT Equity and liabilities Ordinary share capital Retained earnings 704 000 600 000 806 000 420 000 480 000 700 000 Long-term loan (15% p.a.) Accounts payable Other current liabilities 450 000 300 000 442 000 450 000 2 852 000 2 500 000 Additional information All purchases and sales of inventories were on credit. Purchases for the year ended 31 December 2019 amounted to R2 000 000. 1. Credit terms are as follows: 2.1 Debtors: 30 days 2.2 Creditors: 90 days 2.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:QUESTION 5
REQUIRED
5.1
Use the information provided below to calculate the following ratios for 2019. Where applicable,
round off answers to two decimal places.
Inventory turnover period
Trade receivables period
Trade payables period
Return on capital employed
Current ratio
Acid-test ratio
5.2
Comment briefly but meaningfully on your answers in question 5.1 to the following ratios. The ratios
for 2018 are provided in brackets.
Inventory turnover period (2018: 45.67 days)
Trade receivables period (2018: 29.46 days)
Return on capital employed (2018: 23.67%)
Current ratio (2018: 1.20:1)
INFORMATION
Excerpts of financial data of Virgo Limited for 2019 are as follows:
INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2019
Cost of sales
Gross profit
Operating profit
2 200 000
1 050 000
332 000
Interest expense
67 500
STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER:
2019
2018
R
Assets
Non-current assets
1980 000
1 600 000
Inventories
300 000
500 000
Accounts receivable
388 000
350 000
Cash
184 000
50 000
2 852 000
2 500 000
PROGRAMME HANDBOOK: JULY 2020 INTAKE
MANCOSA: POSTGRADUATE DIPLOMA IN PROJECT MANAGEMENT
Equity and liabilities
Ordinary share capital
Retained earnings
Long-term loan (15% p.a.)
Accounts payable
704 000
600 000
806 000
700 000
420 000
450 000
480 000
300 000
Other current liabilities
442 000
450 000
2 852 000
2 500 000
Additional information
1.
All purchases and sales of inventories were on credit. Purchases for the year ended
31 December 2019 amounted to R2 000 000.
2.
Credit terms are as follows:
Debtors: 30 days
2.2 Creditors: 90 days
2.1
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