Variant 3 Question 1 6 marks in total The Managing Director of a Trading Company, has...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Variant 3 Question 1 6 marks in total The Managing Director of a Trading Company, has just received summary sets of Financial Statements for last year and this year. Trading Company Income Statements for years ended December 31 last year and this year Sales Revenue Last year $ 1,800,000 This year $ 1,920,000 Cost of Goods Sold: 160,000 200,000 Beginning Inventories Purchases 1.120,000 1.175.000 Cost of Goods Available for Sales 1,280,000 1,375,000 Ending Inventories (200,000) (250,000) Cost of Goods Sold (1,080,000) (1.125,000) Gross Margin/Profit 720,000 795,000 Expenses (750,000) (680,000) 40,000 Net Income/Profit 45,000 Balance Sheets as at December 31 last year and this year Last year $ This year $ Assets: Current Assets: Cash 4,000 2,000 Trade Receivables 375,000 480,000 Inventories 200,000 250,000 Total Current Assets 579,000 732,000 Non-Current Assets 950,000 930,000 1,529,000 1,662,000 Total Assets Liabilities: Current Liabilities Trade Payables 195,000 225,000 Stockholders' Equity: Common Stock $1 par value 825,000 883,000 Retained Earnings 509,000 554,000 Total SHE 1,334,000 1.437,000 Total Liabilities and SHE 1,529,000 1,662,000 The Finance Director has expressed concern at the increase in Inventories and Trade Receivables levels. Required: (a) Show, by using the data given, how you would calculate ratios that could be used to measure Inventories and Trade Receivables levels during last and this year; comment on Profit Margin for both years; (2 marks) (1 marks) (b) Calculate the Operating Cash Cycle and do your comments; (c) State what caused a change (Increase or Decrease) in Cash balance, making a Statement of Sources and Uses of Cash; (1 mark) (d) Calculate Free Cash Flow for this year. You will need to make a Statement of Cash Flows for this year (at least the Net Cash Flows from Operating Activities, either the Indirect or the Direct method); what in your opinion has caused the negative (if any) Net Cash Flows from Operating Activities; (2 marks) Variant 3 Question 1 6 marks in total The Managing Director of a Trading Company, has just received summary sets of Financial Statements for last year and this year. Trading Company Income Statements for years ended December 31 last year and this year Sales Revenue Last year $ 1,800,000 This year $ 1,920,000 Cost of Goods Sold: 160,000 200,000 Beginning Inventories Purchases 1.120,000 1.175.000 Cost of Goods Available for Sales 1,280,000 1,375,000 Ending Inventories (200,000) (250,000) Cost of Goods Sold (1,080,000) (1.125,000) Gross Margin/Profit 720,000 795,000 Expenses (750,000) (680,000) 40,000 Net Income/Profit 45,000 Balance Sheets as at December 31 last year and this year Last year $ This year $ Assets: Current Assets: Cash 4,000 2,000 Trade Receivables 375,000 480,000 Inventories 200,000 250,000 Total Current Assets 579,000 732,000 Non-Current Assets 950,000 930,000 1,529,000 1,662,000 Total Assets Liabilities: Current Liabilities Trade Payables 195,000 225,000 Stockholders' Equity: Common Stock $1 par value 825,000 883,000 Retained Earnings 509,000 554,000 Total SHE 1,334,000 1.437,000 Total Liabilities and SHE 1,529,000 1,662,000 The Finance Director has expressed concern at the increase in Inventories and Trade Receivables levels. Required: (a) Show, by using the data given, how you would calculate ratios that could be used to measure Inventories and Trade Receivables levels during last and this year; comment on Profit Margin for both years; (2 marks) (1 marks) (b) Calculate the Operating Cash Cycle and do your comments; (c) State what caused a change (Increase or Decrease) in Cash balance, making a Statement of Sources and Uses of Cash; (1 mark) (d) Calculate Free Cash Flow for this year. You will need to make a Statement of Cash Flows for this year (at least the Net Cash Flows from Operating Activities, either the Indirect or the Direct method); what in your opinion has caused the negative (if any) Net Cash Flows from Operating Activities; (2 marks)
Expert Answer:
Related Book For
Accounting and Finance An Introduction
ISBN: 978-1292088297
8th edition
Authors: Peter Atrill, Eddie McLaney
Posted Date:
Students also viewed these accounting questions
-
The Managing Director of a Trading Company, has just received summary sets of Financial Statements for last year and this year. Trading Company Income Statements for years ended December 31 last year...
-
Sales by quarter for last year and the first three quarters of this year were as follows: Using a procedure that you develop that captures the change in demand from last year to this year and also...
-
Financial statement data for the years ended December 31 for Blum Company are shown below. a. Determine the accounts receivable turnover for 2015 and 2014. Round to one decimal place. b. Determine...
-
Barry consumes tacos and pepsi. The price of tacos is initially $4.00 per taco and the price of pepsi is $1.00 per can and Bary has $20.00 to spend. The marginal utility that each good yields is...
-
Camden Hardware's credit sales for the year were $320,000. Accounts receivable at the beginning and end of the year were $50,000 and $70,000, respectively. Calculate the accounts receivable turnover...
-
Marjorie Knaus, an architect, organized Knaus Architects on January 1, 2018. During the month, Knaus Architects completed the following transactions: A. Issued common stock to Marjorie Knaus in...
-
We have \(100 \mathrm{~kg} / \mathrm{h}\) of a feed that is \(60 \mathrm{wt} \%\) methylcyclohexane (A) and \(40 \mathrm{wt} \% \mathrm{n}\)-heptane (D) and \(50 \mathrm{~kg} / \mathrm{h}\) of a feed...
-
1. What are the differences among the types of investment companies? How easily are they bought and sold? Do they sell for their net asset values? If not, how are their prices determined? Do they...
-
In Finland in 2020, the number of people who died of cardiovascular disease wasdivided by the total number of people who were residents of Finland on July 1, 2020. measure
-
Allerton Company acquires all of Deluxe Companys assets and liabilities for cash on January 1, 2021, and subsequently formally dissolves Deluxe. At the acquisition date, the following book and fair...
-
Name and define the molecules that enable active transport across membranes?
-
The foot of a uniform ladder of length 10m is on rough horizontal ground while the top rests on a smooth vertical wall. The weight of the ladder is 300N, and a girl weighing 200N stands on the ladder...
-
A company's inventory records report the following: August 1 August 5 August 12 Beginning balance Purchase Purchase 23 units @ $13 18 units $12 22 units @ $13 On August 15, it sold 46 units. Using...
-
Discuss the biogenesis of mitochondria and chloroplasts in eukaryotic cells. What are the key differences between these organelles in terms of their origin, structure, and function ?
-
According to the psychologist (Thorndyke), what does the life of an animal consist of and what does the life of a human being consist of and which is, therefore, of greater value?
-
What is the work of consent? How does consent, through the actions of government determine how a person's right to property can be limited? Based on Locke's ideas, under what system would the...
-
person take $200,000 per year for 20 years beginning one year from now plus $10000 six years from now and $25,000 12 years from now. Assume the company will earn 12.5% per year on its money.determine...
-
ABC company leased new advanced computer equipment to STU Ltd on 1 January 2019.STULtd has to pay annual rental of $290,000 starting at 1 January 2019. It is a four years lease with ultimate rental...
-
Amsterdam Ltd and Berlin Ltd are both engaged in retailing, but they seem to take a different approach to it according to the following information: Required: Describe what this information indicates...
-
Gandhi Ltd renders a promotional service to small retailing businesses. There are three levels of service: the ?Basic?, the ?Standard? and the ?Comprehensive?. The business plans next year to work at...
-
Raphael Ltd is a small engineering business that has annual sales revenue of 2.4 million, all of which is on credit. In recent years, the business has experienced credit control problems. The average...
-
If a price floor was set at the current equilibrium price, which of the following would cause a surplus as a result? a. an increase in demand b. a decrease in demand c. an increase in supply d. a...
-
What are price floors?
-
An increase in demand results in a(n) _________ equilibrium price and a(n) _________ equilibrium quantity.
Study smarter with the SolutionInn App