Use the data provided to answer the questions that follow relating to Newtech Ltd for 2019:...

 

 

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Use the data provided to answer the questions that follow relating to Newtech Ltd for 2019: Abbreviated Statement of Financial Position: Assets 2019 2018 Non Current/Fixed 4 200 000 3 000 000 Inventory 400 000 600 000 1 200 000 300 000 5 100 000 Receivables 1 550 000 600 000 6 750 000 Cash Equity and Liabilities Share Capital (R2 shares) 4 200 000 4 000 000 Retained Income 600 000 300 000 Long term Debt 250 000 200 000 1700 000 6 750 000 600 000 5 100 000 Payables The abbreviated Statement of Comprehensive Income for the year ended 2019: Sales (10% on credit) 10 200 000 Cost of sales (80% on credit) 4 080 000 Expenses 3 200 000 Net Income after Tax 2 000 000 Dividends 1 700 000 Retained Income 3 000 000 NB: Shares are currently trading at R2, 80 per share. 3.3. Calculate the acid test ratio for both years. (4) 3.4. Accounts Payable Turnover 3.4.1 Calculate the accounts payable period (in days), noting that Newtech Ltd has, after tough negotiations secured a 90 day account with all its creditors. Note: Use average accounts payable for this calculation. (4) 3.4.2. Offer constructive advice to Newtech Traders as to whether this is an ideal situation. (3) 3.5. Calculate the return on equity. Explain if the shareholders will be satisfied with the return. (4) 3.6. Calculate the inventory turnover ratio (use average inventory) and explain the significance of this ratio. (4) Use the data provided to answer the questions that follow relating to Newtech Ltd for 2019: Abbreviated Statement of Financial Position: Assets 2019 2018 Non Current/Fixed 4 200 000 3 000 000 Inventory 400 000 600 000 1 200 000 300 000 5 100 000 Receivables 1 550 000 600 000 6 750 000 Cash Equity and Liabilities Share Capital (R2 shares) 4 200 000 4 000 000 Retained Income 600 000 300 000 Long term Debt 250 000 200 000 1700 000 6 750 000 600 000 5 100 000 Payables The abbreviated Statement of Comprehensive Income for the year ended 2019: Sales (10% on credit) 10 200 000 Cost of sales (80% on credit) 4 080 000 Expenses 3 200 000 Net Income after Tax 2 000 000 Dividends 1 700 000 Retained Income 3 000 000 NB: Shares are currently trading at R2, 80 per share. 3.3. Calculate the acid test ratio for both years. (4) 3.4. Accounts Payable Turnover 3.4.1 Calculate the accounts payable period (in days), noting that Newtech Ltd has, after tough negotiations secured a 90 day account with all its creditors. Note: Use average accounts payable for this calculation. (4) 3.4.2. Offer constructive advice to Newtech Traders as to whether this is an ideal situation. (3) 3.5. Calculate the return on equity. Explain if the shareholders will be satisfied with the return. (4) 3.6. Calculate the inventory turnover ratio (use average inventory) and explain the significance of this ratio. (4)

Answer rating: 100% (QA)

LIABILITIES 2019 2018 ASSETS 2019 2018 Share Capital 420000000 400000000 Fixed Assets 420000000 3000... View the full answer