5. Babs Ltd. assembles computers in Ghana and faces a stiff competition from YES Computers. T...

     

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5. Babs Ltd. assembles computers in Ghana and faces a stiff competition from YES Computers. T statement of financial performance of Babs Ltd for the year 2017 is provided below. Income Statement for the year ended 31 December, 2017 GHC Sales Revenue 15,000 Cost of Sales (6,000) Gross profit 9,000 Other operating Expenses (1,500) Profit before interest and tax 7,500 Interest (4,000) 3,500 Tax (1,000) Net Profit 2,000 Balance Sheet as at 31 December, 2017 Non-Current Assets GHC 50,000 Current Assets: Inventory 2,000 Trade Receivables 3,000 Bank 18,000 23,000 73,000 Equity & Liabilities; Share Capital (100,000 shares) Retained Earnings Non-Current Liabilities 22% Loan Note Current liabilities Trade Payables 18,000 40,000 13,000 53,000 2,000 20,000 The ratios of the competitor is summarized below; 73,000 Gross Profit Margin 30% Net Profit Margin 25% Return On Capital Employed (ROCE) 8% Current Ratio 3 times (3:1) Acid Test Ratio Debt to Equity 2.8 times (2.8:1) 40% Inventory Turnover Period 20 days Trade Receivable Collection period 70 days Account Payable Holding Period 100 days Required a. Calculate comparable ratios for Babs Ltd. 5. Babs Ltd. assembles computers in Ghana and faces a stiff competition from YES Computers. T statement of financial performance of Babs Ltd for the year 2017 is provided below. Income Statement for the year ended 31 December, 2017 GHC Sales Revenue 15,000 Cost of Sales (6,000) Gross profit 9,000 Other operating Expenses (1,500) Profit before interest and tax 7,500 Interest (4,000) 3,500 Tax (1,000) Net Profit 2,000 Balance Sheet as at 31 December, 2017 Non-Current Assets GHC 50,000 Current Assets: Inventory 2,000 Trade Receivables 3,000 Bank 18,000 23,000 73,000 Equity & Liabilities; Share Capital (100,000 shares) Retained Earnings Non-Current Liabilities 22% Loan Note Current liabilities Trade Payables 18,000 40,000 13,000 53,000 2,000 20,000 The ratios of the competitor is summarized below; 73,000 Gross Profit Margin 30% Net Profit Margin 25% Return On Capital Employed (ROCE) 8% Current Ratio 3 times (3:1) Acid Test Ratio Debt to Equity 2.8 times (2.8:1) 40% Inventory Turnover Period 20 days Trade Receivable Collection period 70 days Account Payable Holding Period 100 days Required a. Calculate comparable ratios for Babs Ltd.

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