[15 Marks] Following the launch of a new product on 1 July 2022, Croesus Enterprises experienced...
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[15 Marks] Following the launch of a new product on 1 July 2022, Croesus Enterprises experienced a period of rapid expansion in the last 6 months of the year ended 31 December 2022. The following information is available from the management accounts of Croesus Enterprises: Inventories at end of period Trade receivables at end of period Cash and cash equivalent at end of period Trade payables at end of period Short-term borrowing (overdraft) at end of period Sales (revenue) for the period Cost of sales for the period Additional information ● ● 6 months to 31 December 2022 R 2 440 000 3 430 000 2 380 000 500 000 6 200 000 4 840 000 2.1.2. Inventory days 2.1.3. Debtors collection period 2.1.4. Creditors payment period 2.1.5. Current ratio 2.1.6. Acid test ratio 6 months to 30 June 2022 R 920 000 1 580 000 300 000 1 160 000 4 000 000 2 900 000 All Sales and purchases are on credit. To calculate credit purchases for the 6 months ended 30 June 2022, assume that inventory on 1 January 2022 was R600 000. Required: 2.1. Using the formulae in your module guide, calculate the following ratios for the 6 months ended 31 December 2022 (last 6 months of the year) and the 6 months ended 30 June 2022 (first 6 months of the year). Round off answers to two decimal places in each case: 2.1.1. Gross margin (2) (2) (2) (2) O 0 2.2. Discuss the financial performance and working capital position of Croesus Limited as revealed by the financial statements analyses in 2.1 above and make a recommendation on a major step that the management of Croesus (3) Enterprises should take to address the risks identified with the cash conversion cycle. END OF PAPER [15 Marks] Following the launch of a new product on 1 July 2022, Croesus Enterprises experienced a period of rapid expansion in the last 6 months of the year ended 31 December 2022. The following information is available from the management accounts of Croesus Enterprises: Inventories at end of period Trade receivables at end of period Cash and cash equivalent at end of period Trade payables at end of period Short-term borrowing (overdraft) at end of period Sales (revenue) for the period Cost of sales for the period Additional information ● ● 6 months to 31 December 2022 R 2 440 000 3 430 000 2 380 000 500 000 6 200 000 4 840 000 2.1.2. Inventory days 2.1.3. Debtors collection period 2.1.4. Creditors payment period 2.1.5. Current ratio 2.1.6. Acid test ratio 6 months to 30 June 2022 R 920 000 1 580 000 300 000 1 160 000 4 000 000 2 900 000 All Sales and purchases are on credit. To calculate credit purchases for the 6 months ended 30 June 2022, assume that inventory on 1 January 2022 was R600 000. Required: 2.1. Using the formulae in your module guide, calculate the following ratios for the 6 months ended 31 December 2022 (last 6 months of the year) and the 6 months ended 30 June 2022 (first 6 months of the year). Round off answers to two decimal places in each case: 2.1.1. Gross margin (2) (2) (2) (2) O 0 2.2. Discuss the financial performance and working capital position of Croesus Limited as revealed by the financial statements analyses in 2.1 above and make a recommendation on a major step that the management of Croesus (3) Enterprises should take to address the risks identified with the cash conversion cycle. END OF PAPER
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Calculate the required financial ratios 211 Gross Margin For December 31 2022 Gross Margin Revenue Cost of Sales Revenue Gross Margin 6200000 4840000 6200000 Gross Margin 1360000 6200000 Gross Margin ... View the full answer
Related Book For
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell
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