Mohammed Abdullah is a trade supplier who has been approached by ABC Builders who are requesting...

 

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Mohammed Abdullah is a trade supplier who has been approached by ABC Builders who are requesting credit terms for the first time. Their managing director has provided Mohammed Abdullah with the following extracts from the final accounts for the past two years and Mohammed Abdullah has approached you for advice. Financial Managem Financial Manageme-1/ Details Sales turnover (total) Cash sales Cost of goods sold EBIT Total assets Operating expenses Ordinary share capital Long term loan @10% Retained earnings Bank Debtors (opening) Creditors (opening) Debtors (closing) Creditors (closing) Credit purchases a) Calculate the following ratios for both years: i) Proprietory Ratio ii) Avearge Payable Period in days iii) Receivables Collection period in days iv) Interest Coverage ratio v) Debt Equity Ratio Preference Share capital Reserves and Surplus 2020 (OMR) BSAC2102/BAFE2100/210 800,000 155,000 350,000 148,000 900,000 210,000 300,000 40,000 175,000 (30,000) 128,000 85,000 200,000 150,000 450,000 200,000 30,000 2021 (OMR) 850,000 250,000 240,000 126,000 950,000 270,000 300,000 70,000 240,000 15,000 148,000 90,000 75,000 80,000 625,000 150,000 25,000 Somer-Fall-2022-23 Page 5 of 5 b) You are required to offer an advice to Mohammed Abdullah based on your calculations with regards to the viability of engaging in a credit relationship with ABC Builders. Mohammed Abdullah is a trade supplier who has been approached by ABC Builders who are requesting credit terms for the first time. Their managing director has provided Mohammed Abdullah with the following extracts from the final accounts for the past two years and Mohammed Abdullah has approached you for advice. Financial Managem Financial Manageme-1/ Details Sales turnover (total) Cash sales Cost of goods sold EBIT Total assets Operating expenses Ordinary share capital Long term loan @10% Retained earnings Bank Debtors (opening) Creditors (opening) Debtors (closing) Creditors (closing) Credit purchases a) Calculate the following ratios for both years: i) Proprietory Ratio ii) Avearge Payable Period in days iii) Receivables Collection period in days iv) Interest Coverage ratio v) Debt Equity Ratio Preference Share capital Reserves and Surplus 2020 (OMR) BSAC2102/BAFE2100/210 800,000 155,000 350,000 148,000 900,000 210,000 300,000 40,000 175,000 (30,000) 128,000 85,000 200,000 150,000 450,000 200,000 30,000 2021 (OMR) 850,000 250,000 240,000 126,000 950,000 270,000 300,000 70,000 240,000 15,000 148,000 90,000 75,000 80,000 625,000 150,000 25,000 Somer-Fall-2022-23 Page 5 of 5 b) You are required to offer an advice to Mohammed Abdullah based on your calculations with regards to the viability of engaging in a credit relationship with ABC Builders.

Answer rating: 100% (QA)

a Calculation of ratios i Proprietary Ratio Proprietary Ratio Shareholders FundsTotal Assets Year 2020 Shareholders Funds Ordinary Share Capital Reserves and Surplus Retained Earnings 300000 30000 175... View the full answer