Good Earth Poultry Company had sales of P 4.4 million last year and current assets and...

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Good Earth Poultry Company had sales of P 4.4 million last year and current assets and liabilities as follows (in thousand pesos): Cash P 160,000 Receivable Accounts Payable Bank Loan 260,000 Inventory 420.000 Total: P 60,000 120,000 900,000 1,080,000 Required: Total Good Earth Poultry current assets and accounts payable changed in proportion to sales because of the nature of the poultry growing business. The company had an existing credit line with its local bank for a maximum amount of P300,000. a) Calculate the networking capital and current ratio of Good Earth Poultry b) If sales increase to P6 million, what will happen to the current ratio? Ignore any possible effects of profits. c) d) If sakes fall to P3 million, what will happen to the current ratio? Ignore any possible effects of profits. Suppose that sales increased by 20 percent and Good Earth Poultry wanted to keep its current ratio to the percent level. How much additional bank loan can it afford? It this amount within the existing credit limit? How much additional bank loan would the company need? What will happen to the current ratio? Good Earth Poultry Company had sales of P 4.4 million last year and current assets and liabilities as follows (in thousand pesos): Cash P 160,000 Receivable Accounts Payable Bank Loan 260,000 Inventory 420.000 Total: P 60,000 120,000 900,000 1,080,000 Required: Total Good Earth Poultry current assets and accounts payable changed in proportion to sales because of the nature of the poultry growing business. The company had an existing credit line with its local bank for a maximum amount of P300,000. a) Calculate the networking capital and current ratio of Good Earth Poultry b) If sales increase to P6 million, what will happen to the current ratio? Ignore any possible effects of profits. c) d) If sakes fall to P3 million, what will happen to the current ratio? Ignore any possible effects of profits. Suppose that sales increased by 20 percent and Good Earth Poultry wanted to keep its current ratio to the percent level. How much additional bank loan can it afford? It this amount within the existing credit limit? How much additional bank loan would the company need? What will happen to the current ratio?

Answer rating: 100% (QA)

To calculate the net working capital and current ratio of Good Earth Poultry well use the given information Current Assets Cash P60000 Receivable P120000 Inventory P900000 Current Liabilities Accounts ... View the full answer