Financial Indicators/Ratios	2018	2017
Current ratio	?	2.92 : 1
Acid test ratio	?	1.28 : 1
Debtors collection period	?	16 days
Creditors payment period	?	27 days
Inventory turnover rate	?	24 times/year
Gross profit percentage	?	35%
Net profit percentage	?	10,29%
Return on equity	?	210,53%
Debt equity ratio	?	0.74

Catwalksale (Pty) Ltd

Extract from the statement of profit or loss and other comprehensive income for the year ending 31 December 2018:

	2018	2017
Revenue (40% on credit)	3 550 000	3 500 000
Cost of sales (30% on credit)	(2 307 500)	(2 275 000)
Net profit after tax	50 000	360 000

Catwalksale (Pty) Ltd

Statement of financial position as at 31 December 2018:

	2018	2017
Assets
Property, plant and equipment	125 000	120 000
Current assets	188 000	178 000
Inventory	110 000	100 000
Trade debtors	75 000	66 000
Other receivables	3 000	4 000
Cash and cash equivalents	0	8 000
Total assets	313 000	298 000
Equity and liabilities
Ordinary shares	51 000	51 000
Retained earnings	125 000	120 000
Long-term loans	47 000	66 000
Current liabilities	90 000	61 000
Trade creditors	66 000	53 000
Income tax	4 000	8 000
Bank overdraft	20 000	0
Total equity and liabilities	313 000	298 000

REQUIRED:

1.1       Use the financial information provided to calculate the following ratios for the year ending 31 December 2018:

1. Current ratio;                                                                                                         (2)
2. Acid test ratio;                                                                                                       (2)
3. Debtors collection period (in days);                                                                      (2)
4. Creditors payment period (in days);                                                                     (2)
5. Inventory turnover rate (times per year);                                                              (2)
6. Gross profit percentage;                                                                                       (2)
7. Net profit percentage;                                                                                           (2)
8. Return on equity; and                                                                                           (2)
1. Debt equity ratio.                                                                                                   (2)

Answer rating: 100% (QA)

To calculate the requested ratios based on the given financial information for Catwalksale Pty Ltd for the year ending 31 December 2018 we can use the ... View the full answer