ABC Manufacturing Company Balance Sheet as at 31 March 2019 2018 750 10,000 12,750 _31,200 53,950 22,500 71,250 (31,200) _ 62.550 116.500 Cash 17,200 46,250 64,200 Accounts receivable Inventory Total current assets Land 27,120 Plant & equipment less accumulated depreciation Total fixed assets 100,000 (32,200) 94.920 159,120 11,500 18,250 29,750 33,700 53,050 116,500 Accounts payable Bank overdraft 24,000 49,500 73,500 27,500 58,120 159.120 Total current liabilities Term loan Sharcholders' funds ABC Manufacturing Company Income Statement for the year ended 31 March 2018 2019 129,000 _77.400 163,000 97.800 65,200 Sales Cost of goods sold Gross profit Expenses: Administrative 51,600 Operating Depreciation Total expenses Eamings before interest & tax Interest Earnings before taxes 21,750 12,900 4,700 39.350 21,750 16,300 10.000 48.050 17,150 12,250 3,500 8,750 4,200 4.550 6,250 10,900 5,232 5.668 Тах Net Income Required: a. Based on the financial statements for ABC Manufacturing, compute the following ratios: Industry Average 1.84 Actual 2019 Actual 2018 Current ratio Acid test ratio .66 Average collection period Inventory turnover 37 days 2.6 times

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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ABC Manufacturing Company
Balance Sheet
as at 31 March
2019
2018
750
17,200
46,250
64,200
27,120
100,000
(32,200)
94.920
159,120
Cash
10,000
12,750
_31,200
53,950
22,500
71,250
(31.200)
62.550
116.500
Accounts receivable
Inventory
Total current assets
Land
Plant & equipment
less accumulated depreciation
Total fixed assets
11,500
18.250
29,750
33,700
53.050
Accounts payable
Bank overdraft
24,000
49,500
Total current liabilities
Term loan
Sharcholders' funds
73,500
27,500
58,120
116,500
159.120
ABC Manufacturing Company
Income Statement
for the year ended 31 March
2018
Sales
2019
129,000
163,000
97.800
65,200
Cost of goods sold
Gross profit
Expenses:
Administrative
Operating
Depreciation
Total expenses
Earnings before interest & tax
_77.400
51,600
21,750
12,900
21,750
16,300
10.000
48,050
17,150
4,700
39.350
12,250
3,500
8,750
Interest
6,250
10,900
5,232
5.668
Earnings before taxes
_4,200
4,550
Тах
Net Income
Required:
a. Based on the financial statements for ABC Manufacturing, compute the following ratios:
Industry
Average
1.84
Actual
2018
Actual
2019
Current ratio
Acid test ratio
.66
37 days
Average collection period
Inventory turnover
2.6 times
Transcribed Image Text:ABC Manufacturing Company Balance Sheet as at 31 March 2019 2018 750 17,200 46,250 64,200 27,120 100,000 (32,200) 94.920 159,120 Cash 10,000 12,750 _31,200 53,950 22,500 71,250 (31.200) 62.550 116.500 Accounts receivable Inventory Total current assets Land Plant & equipment less accumulated depreciation Total fixed assets 11,500 18.250 29,750 33,700 53.050 Accounts payable Bank overdraft 24,000 49,500 Total current liabilities Term loan Sharcholders' funds 73,500 27,500 58,120 116,500 159.120 ABC Manufacturing Company Income Statement for the year ended 31 March 2018 Sales 2019 129,000 163,000 97.800 65,200 Cost of goods sold Gross profit Expenses: Administrative Operating Depreciation Total expenses Earnings before interest & tax _77.400 51,600 21,750 12,900 21,750 16,300 10.000 48,050 17,150 4,700 39.350 12,250 3,500 8,750 Interest 6,250 10,900 5,232 5.668 Earnings before taxes _4,200 4,550 Тах Net Income Required: a. Based on the financial statements for ABC Manufacturing, compute the following ratios: Industry Average 1.84 Actual 2018 Actual 2019 Current ratio Acid test ratio .66 37 days Average collection period Inventory turnover 2.6 times
Times interest carned
3.6
Debt to total assets
55%
Gross profit margin
Net profit margin
Total asset turnover
39%
3.4%
1.2 times
Fixed asset turnover
1.5 times
4.3%
Return on total assets
Sovlve
Return on sharcholders' funds
10%
b. Write a brief report to the bank manager outlining the reasons why the loan should or should not
be granted.
Transcribed Image Text:Times interest carned 3.6 Debt to total assets 55% Gross profit margin Net profit margin Total asset turnover 39% 3.4% 1.2 times Fixed asset turnover 1.5 times 4.3% Return on total assets Sovlve Return on sharcholders' funds 10% b. Write a brief report to the bank manager outlining the reasons why the loan should or should not be granted.
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