Specific Topic is on FINANCIAL STATEMENT ANALYSIS

11. Basic liquidity ratios. You are been asked by the Chief 'Financial Officer of Kwing Corporation to analyze its liquidity position in 2012. You have gathered the following data from the records of the company and industry published reports (in thousands)? Kwing Corp. industry Average Average oash P 3. 500 P 2 000 Average trade receivables _ 8.000 10,000 Average inventory 6.500 _ 7,000 Average trade payables 14,000 12.000 Net cash sales 20,000 ' 25,000 Net credit sales - ' 200.000 150. 000 Cost of sales. _ 130,000 112 000 Net credit purchases 140. 000 96 000 ' The company uses a aeoeay a year base. The credit terms offered to customers we 2I'10 nl40. Suppliers give credit terms of 3'20. N40 Required: For Kwing Corporation and the industry. compute the following: a Receivable turnover Collection period inventory turnover Inventory days (Days to sell inventory) 219s? Payable turnover Payment period operating cycie Net cash cycle Net working capital Working capital turnover Current ratio Acid-test (quickassets}_ ratio .. "J a at" 7'3\".\" I2. Effects of leverage to return on ordinary equity. You are in the process of organizmg a new. company to produce and sell a lady beauty product. You feel that P5 million would be enough to finance the new company's operations. You are considering following financing mix in raising the needed money for investment. Straight ordinary equity I. All the P5 million would be raised by Issuance of ordinary shares Shareholders' equity mix: ' P3.5 million would be raised from ordinary shares issuances and P1. 5 million from the sale of PtOO pr, 10%. preference share. Leverage and equity mix: P30 million would be obtained. from ordinary shares issuancee and P20 million from issuance of a 12% bonds payable. ' You estimated that the operations would generate an eaming of P2 million each year before interest and taxes. The tax rate is 40%. Required: Determine the best nancing mix that would maximize return on ordinary equity