Merit is a Company that operates in the Retail business and has a 30 June 2021 year
Question:
Merit is a Company that operates in the Retail business and has a 30 June 2021 year end. The Books of Merit private limited are as follows: Statement of Profit or loss and other comprehensive income as at 30 June 2021 R Sales 1 500 000 Cost of Sales (750 000) Gross Profit 750 000 Office expenses (Including interest on debentures) (125 000) Selling expenses (125 000) Profit before Tax 500 000 Tax (250 000) Net Profit 250 000 Statement of Financial Position as at 30 June 2021 R Assets
Fixed Assets 5 500 000
Inventory 175 000
Trade Receivables 350 000
Bills Receivables 50 000 Cash 225 000
Intangible Assets 100 000
otal Assets 6 400 000
Equity and Liabilities Share Capital 2 000 000 10%
Preference shares 2 000 000
Retained Earnings 1 100 000 10%
Debentures 1 000 000
Trade Payables 100 000
Bank Overdraft 150 000 6
Bills Payables 45 000
Outstanding Expenses 5 000
Total Equity and Liabilities 6 400 000
Additional Information
1. Opening Inventory was R 325 000 2. A year has 360 days Required Calculate the following ratios, Answer ALL questions. [35 Marks]
1. Gross profit ratio (2 marks)
2. Inventory turnover ratio (3 marks)
3. Operating ratio (5 marks)
4. Current ratio (3 marks)
5. Liquidity ratio (3 marks)
6. Debtors/Receivables ratio (4 marks) 7. Creditors/Payables ratio (4 marks)
8. Proprietary/Shareholders to Total assets ratio (3 marks) 9. Rate of return on net capital employed (2 marks) 10. Rate of return on equity shares (3 marks) 11. Days’ supply (Inventory) on hand (3 marks)
