You have just been appointed as the financial controller of Sanchez & Gomez Limited, a privately owned entity operating in the fashion wholesale business. You have been asked to attend the forthcoming monthly management meeting and report on aspects of the entity’s financial position. You are aware that during the previous financial year the management team has been concerned about the liquidity of the company, and its working capital management. The following information is available from the management accounts for the year ended 30 December 2015:       6 months to 30 june 2014  "000" 6 months to 30 Dec 2014 “000”     Inventories at period end  1050 550  Receivables at period end  1100 950  Cash and cash equivalents at period end   ------  150  Trade payables at period end  1400 800  Short term borrowings at period end  250  --------   Revenue for the period  2250 2000  Cost of sales for the period  1500 1300 Prepare a brief report that analyses the working capital and liquidity position of Sanchez & Gomez limited. Include the calculations for the relevant ratios, in your report.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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You have just been appointed as the financial controller of Sanchez & Gomez Limited, a privately owned entity operating in the fashion wholesale business. You have been asked to attend the forthcoming monthly management meeting and report on aspects of the entity’s financial position. You are aware that during the previous financial year the management team has been concerned about the liquidity of the company, and its working capital management.
The following information is available from the management accounts for the year ended 30 December 2015:

 

 

  6 months to 30 june 2014  "000" 6 months to 30 Dec 2014 “000”   
 Inventories at period end  1050 550
 Receivables at period end  1100 950
 Cash and cash equivalents at period end   ------  150
 Trade payables at period end  1400 800
 Short term borrowings at period end  250  -------- 
 Revenue for the period  2250 2000
 Cost of sales for the period  1500 1300

Prepare a brief report that analyses the working capital and liquidity position of Sanchez & Gomez limited. Include the calculations for the relevant ratios, in your report.

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