Vee-Jay Company (Pty) Ltd Extracted the following Ratios from its books for the year 2020 together with the relevant industry averages RATIOS 2020 Industry average 1. Current Ratio 1,9 2 2. Acid test ratio 0,8 1 3. Inventory Turnover 4 times 6 times 4. Debtors’ collection period (days) 51 days 40 days 5. Creditors payment period (days) 61 days 50 days Required: 1. For each of the above five ratios , answer the following : a) what does the ratio measure b) state whether there is an improvement or decline in the ratio in comparison with the industry average 2. Comment on the company’s overall liquidity position in comparison with industry.

Vee-Jay Company (Pty) Ltd Extracted the following Ratios from its books for the year 2020 together with the relevant industry averages RATIOS 2020 Industry average 1. Current Ratio 1,9 2 2. Acid test ratio 0,8 1 3. Inventory Turnover 4 times 6 times 4. Debtors’ collection period (days) 51 days 40 days 5. Creditors payment period (days) 61 days 50 days Required: 1. For each of the above five ratios , answer the following : a) what does the ratio measure b) state whether there is an improvement or decline in the ratio in comparison with the industry average 2. Comment on the company’s overall liquidity position in comparison with industry.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 8EB: Using the following select financial statement information from Mover Supply Depot, compute the...

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Question 2 Vee-Jay Company (Pty) Ltd Extracted the following Ratios from its books for the year 2020 together with the relevant industry averages Ratios 2020 Industry average Current Ratio 1.9 2 Acid test ratio 0.8 1 Inventory Turnover 4 times 6 times Debtors’ collection period (days) 51 days 40 days . Creditors payment period (days) 61 days 50 days Required:1. For each of the above five ratios , answer the following :a) what does the ratio measure b) state whether there is an improvement or decline in the ratio in comparison with theindustry average 2. Comment on the company’s overall liquidity position in comparison with industry.