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

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

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
Expert Solution
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