Following are the summarized financial statements of Lady Bug Limited (LBL) and its competitor Cat Noir...

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Following are the summarized financial statements of Lady Bug Limited (LBL) and its competitor Cat Noir Limited (CNL) for the year ended 31 December 2019: Statement of financial position LBL LBL CNL Assets Equity & liabilities Rs. in million 5,400 8,400 9,450 Fixed assets Current assets: Capital and reserves Long-term loan 1,900 4,600 Inventory 4,800 Current liabilities: Debtors 2,700 Creditors 2,900 4,500 Cash 1,200 Accrued expenses 900 350 8,700 3,800 4,850 14,100 14,100 18,900 CNL Rs. in million 7,800 7,100 3,200 800 11,100 18,900 Statement of profit or loss LBL - Rs. in million 16,700 (11,400) (3,500) (250) -ww CNL Sales Cost of goods sold Gross profit Operating expenses Finance cost Net profit 1,550 2,100 Required: Compute relevant ratios for LBL and CNL to assess which company seems to: (i) give more incentives to its customers to pay on time avail extended credit terms from its suppliers (ii) (iii) be more efficient in the use of capital (iv) keep lower selling prices to gain the market share (v) have better liquidity position (vi) have higher ability to convert its assets into profit (vii) control operating expenses more efficiently (viii) have higher ability to raise bank loan in future 5,300 35,400 (27,800) 7,600 (4,900) (600) Following are the summarized financial statements of Lady Bug Limited (LBL) and its competitor Cat Noir Limited (CNL) for the year ended 31 December 2019: Statement of financial position LBL LBL CNL Assets Equity & liabilities Rs. in million 5,400 8,400 9,450 Fixed assets Current assets: Capital and reserves Long-term loan 1,900 4,600 Inventory 4,800 Current liabilities: Debtors 2,700 Creditors 2,900 4,500 Cash 1,200 Accrued expenses 900 350 8,700 3,800 4,850 14,100 14,100 18,900 CNL Rs. in million 7,800 7,100 3,200 800 11,100 18,900 Statement of profit or loss LBL - Rs. in million 16,700 (11,400) (3,500) (250) -ww CNL Sales Cost of goods sold Gross profit Operating expenses Finance cost Net profit 1,550 2,100 Required: Compute relevant ratios for LBL and CNL to assess which company seems to: (i) give more incentives to its customers to pay on time avail extended credit terms from its suppliers (ii) (iii) be more efficient in the use of capital (iv) keep lower selling prices to gain the market share (v) have better liquidity position (vi) have higher ability to convert its assets into profit (vii) control operating expenses more efficiently (viii) have higher ability to raise bank loan in future 5,300 35,400 (27,800) 7,600 (4,900) (600)

Answer rating: 100% (QA)

i Assessing which company gives more incentives to its customers to pay on time We determine Average collection period ACPAccounts ReceivableTotal Sales365 LBL CNL Accounts Receivable 2700 3200 Total ... View the full answer