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5.2 Explain how the company can improve on the fallowing by providing twa suggestions each: 5.2.1 Inventory turnover period 5.2.2 Trade receivables period

5.2 Explain how the company can improve on the fallowing by providing twa suggestions each: 5.2.1 Inventory turnover period 5.2.2 Trade receivables period

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please assist with questions 5.2.1 and 5.2.2
Statement of Financial Position as at 31 December: 2019 2018 R. R Assets Nan-current assets 980 000 780 000 Inventories 1 300 000 1 000 000 Accounts receivable 388 000 310 000 Cash 184 000 147 000 2 852 000 2 237 000 Equity and liabilities Ordinary share capital Retained eamings Long-term loan Accounts payable 704 000 563 000 816 000 680 000 330 000 655 000 420 000 900 000 Income tax payable 12 000 9 000 2 852 000 2 237 000 Additional information 1. All purchases and sales of inventories are on credit. The purchases for the year ended 31 December 2019 amounted to R2 500 000.
Transcribed Image Text:Statement of Financial Position as at 31 December: 2019 2018 R. R Assets Nan-current assets 980 000 780 000 Inventories 1 300 000 1 000 000 Accounts receivable 388 000 310 000 Cash 184 000 147 000 2 852 000 2 237 000 Equity and liabilities Ordinary share capital Retained eamings Long-term loan Accounts payable 704 000 563 000 816 000 680 000 330 000 655 000 420 000 900 000 Income tax payable 12 000 9 000 2 852 000 2 237 000 Additional information 1. All purchases and sales of inventories are on credit. The purchases for the year ended 31 December 2019 amounted to R2 500 000.
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. 5.1.1 Inventory turnover period 5.1.2 Trade receivables period 5.1.3 Trade payables period 5.1.4 Return on capital employed 5.1.5 Current ratia 5.1.6 Acid-test ratio 5.2 Explain how the company can improve on the following by providing twa suggestions each: 5.2.1 Inventory turnover period 5.2.2 Trade receivables period INFORMATION Excerpts of the financial data of Leo Limited for 2019 are as follows: Income statement for the year ended 31 December 2019 R Sales 3 250 000 2 200 000 332 000 Cost of sales Operating profit Interest expense 44 000 Profit before tax 288 000 Company tax 86 000
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. 5.1.1 Inventory turnover period 5.1.2 Trade receivables period 5.1.3 Trade payables period 5.1.4 Return on capital employed 5.1.5 Current ratia 5.1.6 Acid-test ratio 5.2 Explain how the company can improve on the following by providing twa suggestions each: 5.2.1 Inventory turnover period 5.2.2 Trade receivables period INFORMATION Excerpts of the financial data of Leo Limited for 2019 are as follows: Income statement for the year ended 31 December 2019 R Sales 3 250 000 2 200 000 332 000 Cost of sales Operating profit Interest expense 44 000 Profit before tax 288 000 Company tax 86 000
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