The information below is taken from the records of two companies in the same industry. Non-Current...

Transcribed Image Text:

The information below is taken from the records of two companies in the same industry. Non-Current Assets Current Assets Inventories Trade Receivables Cash Current Liabilities Trade payables Net current assets Less: 8% Debentures) Share capital and reserves Issued share capital (Rs1) Retained earnings Tang Limited Rs 1,230,000 240,000 320,000 1,790,000 900,000 Sales Cost of sales Gross profit Other operating expenses Profit before interest and tax Interest expense Profit before tax Income tax Profit after tax Dividends Retained earnings Rs 1,700,000 890,000 2,590,000 500,000 2,090,000 1,100,000 990,000 2,090,000 Wang Limited Rs 950,000 640,000 320,000 1,910,000 Tang Limited Rs 1,050,000 Net profit margin Return on capital employed 11,200,000 8,000,000 3,200,000 1,600,000 1,600,000 80,000 1,520,000 330,000 1,190,000 200,000 990,000 REQUIRED: (a) Calculate the following ratios for both companies: (1) (ii) (iii) Current (iv) Quick Trade receivables collection period (v) (vi) Trade payables payment period Rs 2,400,000 860,000 3,260,000 1,000,000 2,260,000 1,760,000 500,000 2,260,000 Wang Limited Rs 16,400,000 12,960,000 3,440,000 1,720,000 1,720,000 160,000 1,560,000 700,000 860,000 360,000 500,000 (3 marks (3 marks (3 marks (3 marks (3 mark (3 mark The following information relates to Mota Limited. Sales (250,000 units) Variable costs Fixed costs Profit REQUIRED: (a) Calculate the break-even point in units and sales value. (b) Calculate the margin of safety in units and sales value. (c) If fixed costs are increased by Rs50,000, how many units will have to be produced in order to break even? (d) Calculate the volume required to achieve a target profit of Rs10,000, assuming that fixed costs are increased by Rs50,000 and variable costs decreases by Rs0.2 per unit. (e) List six assumptions of break-even analysis. PART B: (12 MARKS) Explain the following accounting concepts Rs 500,000 300,000 100,000 100,000 (a) Consistency (b) Accruals (c) Prudence (d) Going concern The information below is taken from the records of two companies in the same industry. Non-Current Assets Current Assets Inventories Trade Receivables Cash Current Liabilities Trade payables Net current assets Less: 8% Debentures) Share capital and reserves Issued share capital (Rs1) Retained earnings Tang Limited Rs 1,230,000 240,000 320,000 1,790,000 900,000 Sales Cost of sales Gross profit Other operating expenses Profit before interest and tax Interest expense Profit before tax Income tax Profit after tax Dividends Retained earnings Rs 1,700,000 890,000 2,590,000 500,000 2,090,000 1,100,000 990,000 2,090,000 Wang Limited Rs 950,000 640,000 320,000 1,910,000 Tang Limited Rs 1,050,000 Net profit margin Return on capital employed 11,200,000 8,000,000 3,200,000 1,600,000 1,600,000 80,000 1,520,000 330,000 1,190,000 200,000 990,000 REQUIRED: (a) Calculate the following ratios for both companies: (1) (ii) (iii) Current (iv) Quick Trade receivables collection period (v) (vi) Trade payables payment period Rs 2,400,000 860,000 3,260,000 1,000,000 2,260,000 1,760,000 500,000 2,260,000 Wang Limited Rs 16,400,000 12,960,000 3,440,000 1,720,000 1,720,000 160,000 1,560,000 700,000 860,000 360,000 500,000 (3 marks (3 marks (3 marks (3 marks (3 mark (3 mark The following information relates to Mota Limited. Sales (250,000 units) Variable costs Fixed costs Profit REQUIRED: (a) Calculate the break-even point in units and sales value. (b) Calculate the margin of safety in units and sales value. (c) If fixed costs are increased by Rs50,000, how many units will have to be produced in order to break even? (d) Calculate the volume required to achieve a target profit of Rs10,000, assuming that fixed costs are increased by Rs50,000 and variable costs decreases by Rs0.2 per unit. (e) List six assumptions of break-even analysis. PART B: (12 MARKS) Explain the following accounting concepts Rs 500,000 300,000 100,000 100,000 (a) Consistency (b) Accruals (c) Prudence (d) Going concern

Answer rating: 100% (QA)

Part A Ratios and BreakEven Analysis Tang Limited and Wang Limited Ratios i Net Profit Margin Tang Limited 1190000 11200000 100 1063 Wang Limited 860000 8000000 100 1075 ii Return on Capital Employed ... View the full answer