Xander Ltd experienced a fire on 30 June 2016 in which its financial records were partially destroyed.
Question:
Xander Ltd experienced a fire on 30 June 2016 in which its financial records were partially destroyed. It has been able to salvage some of the records and has ascertained the following balances.
Additional information:
1. The inventory turnover is 3.6 times.
2. The return on ordinary shareholders’ equity is 22%. Xander Ltd had no additional paid-up capital or reserves.
3. The receivables turnover is 9.4 times. All sales are on credit.
4. The return on assets is 12.5% (12.5 cents).
5. Total assets at 30 June 2015 were $805 000.
Required
Calculate the following for Xander Ltd:
(a) Cost of sales for 2016.
(b) Net sales for 2016.
(c) Profit for 2016.
(d) Total assets at 30 June 2016.
Cash Receivables (net) Inventory Accounts payable Notes payable (non-current) Ordinary shares, $100 each Retained earnings 30 June 2016 $ 30000 72500 200 000 50 000 30 000 400 000 113500 1 July 2015 $ 10000 126 000 180 000 90 000 60 000 400 000 101 000
Step by Step Answer:
Solution a Cost of sales for 2016 Inventory at 31 December 2015 ...View the full answer
Financial Accounting Reporting Analysis And Decision Making
ISBN: 9780730313748
5th Edition
Authors: Shirley Carlon, Rosina Mladenovic Mcalpine, Chrisann Palm, Lorena Mitrione, Ngaire Kirk, Lily Wong
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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