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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?

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?

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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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
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
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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