Question: Exercise material and tasks Case Study: The Bell Manufacturing Company BALANCE SHEETS 2003 2004 2005 2006 CURRENT ASSETS Stock Debtors Cash / Bank FIXED ASSETS
Exercise material and tasks
Case Study: The Bell Manufacturing Company
BALANCE SHEETS
2003
2004
2005
2006
CURRENT ASSETS
Stock Debtors Cash / Bank
FIXED ASSETS
Machinery & Equipment Motor vehicle
Less Depreciation
TOTAL ASSETS
CURRENT LIABILITIES
Creditors Taxation Bank overdraft Proposed dividends
SHARE CAPITAL
Issued Capital Reserves / Profit Total capital employed
TOTAL LIABILITIES
65,000 90,000 39,000 194,000
104,000 40,000 144,000 24,000 120,000
314,000
90,000 4,000 0 5,000 99,000
150,000 65,000 215,000
314,000
113,000 178,000 9,000 300,000
314,000 40,000 354,000 64,000 290,000
590,000
195,000 10,000 20,000 5,000 230,000
200,000 160,000 360,000
590,000
189,000 294,000 15,000 498,000
504,000 40,000 544,000 114,000 430,000
928,000
330,000 20,000 50,000 5,000 405,000
240,000 283,000 523,000
928,000
286,000 380,000 10,000 676,000
702,000 40,000 742,000 175,000 567,000
1,243,000
430,000 32,000 100,000 5,000 567,000
240,000 436,000 676,000
1,243,000
FURTHER INFORMATION
Profit & Loss Account Summary
Sales Operating Profit Post Tax Profit
Credit Purchases 2003
1,100,000 50,000 46,000
300,000 2004
2,300,000 110,000 100,000
620,000 2005
3,200,000 148,000 128,000
860,000 2006
4,100,000 190,000 158,000
1,431,900
Closing stock for 2002 was USD 50,000 Mark up on goods sold is 25% throughout the four year period Credit period allowed by creditors is 60 days 50% of the sales were on credit Credit policy of the company on credit sales is 45 days.
TASKS:
The Bank Manager asks you, as the loan officer, to analyse the past financial statements which have been provided by the companys directors using the following indicators:
Net Profit Margin (after tax) Return on Investment Debt to Equity Ratio Current Ratio Quick Ratio Average Collection Period (in months) Average Credit Period (in months) Stock Turnover Ratio
Comment on the companys profitability and liquidity position.
NB: All ratios should be rounded to two decimal places.
what is the stock turnover ratio for this problem? also calculate for its average collection period and average credit period.
CASE STUDY: THE BELL MANUFACTURING COMPANY2
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