FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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a.    Compute the following ratios:

i.    Accounts Receivable Turnover ratio;
ii.    Accounts Payable Turnover ratio;
iii.    Average Collection Period;
iv.    Average Payable Period;
v.    Quick Ratio;
vi.    Gross Profit Margin.
vii.    Net Profit Margin
viii.    Debt ratiob

b.      Explain briefly what is factoring?

Income Statement for the year Ended 31 December 2016
Garth Ltd.
James Ltd.
$'000
$'000
$'000
$'000
Sales revenue
1 192
1 356
Cost of Sales
|(788)
(1 052)
Gross Profit
404
304
Expenses:
Administrative
72
90
Selling $ Dist.
106
112
Depreciation
28
38
Loan note interest
(206)
16
(256)
Net Profit
198
48
1
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Transcribed Image Text:Income Statement for the year Ended 31 December 2016 Garth Ltd. James Ltd. $'000 $'000 $'000 $'000 Sales revenue 1 192 1 356 Cost of Sales |(788) (1 052) Gross Profit 404 304 Expenses: Administrative 72 90 Selling $ Dist. 106 112 Depreciation 28 38 Loan note interest (206) 16 (256) Net Profit 198 48 1
SECTION A
Instructions: Answer ALL questions from this section.
Daniel, an investor is considering purchasing shares in either Garth Ltd & James Ltd. Both
companies are in the same line of business and their accounts are summarized below:
Statement of financial Po
ion as at December 1st 2016
Assets
Garth Ltd
James Ltd.
Non Current Assets
$'000
$'000
S'000
$'000
At Cost
840
2 140
Accumulated Depreciation
(226)
614
(280)
1 852
Current Assets
Inventory
276
334
Receivables
138
196
Bank and Cash
192
606
18
548
1 220
2 400
Equity and Liabilities
1 800
Сapital
Retained Earnings
740
340
138
1 080
1 938
Non-Current Liabilities
10 % loan Note
160
Current Liabilities
240
Trade payables
Interest payable
120
Income tax
20
140
60
302
1 220
240
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Transcribed Image Text:SECTION A Instructions: Answer ALL questions from this section. Daniel, an investor is considering purchasing shares in either Garth Ltd & James Ltd. Both companies are in the same line of business and their accounts are summarized below: Statement of financial Po ion as at December 1st 2016 Assets Garth Ltd James Ltd. Non Current Assets $'000 $'000 S'000 $'000 At Cost 840 2 140 Accumulated Depreciation (226) 614 (280) 1 852 Current Assets Inventory 276 334 Receivables 138 196 Bank and Cash 192 606 18 548 1 220 2 400 Equity and Liabilities 1 800 Сapital Retained Earnings 740 340 138 1 080 1 938 Non-Current Liabilities 10 % loan Note 160 Current Liabilities 240 Trade payables Interest payable 120 Income tax 20 140 60 302 1 220 240
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