ABC Manufacturing CompanyBalance Sheetas at 31 March2019201875017,20046,25064,20027,120100,000(32,200)94.920159,120Cash10,00012,750_31,20053,95022,50071,250(31.200)62.550116.500Accounts receivableInventoryTotal current assetsLandPlant & equipmentless accumulated depreciationTotal fixed assets11,50018.25029,75033,70053.050Accounts payableBank overdraft24,00049,500Total current liabilitiesTerm loanSharcholders' funds73,50027,50058,120116,500159.120ABC Manufacturing CompanyIncome Statementfor the year ended 31 March2018Sales2019129,000163,00097.80065,200Cost of goods soldGross profitExpenses:AdministrativeOperatingDepreciationTotal expensesEarnings before interest & tax_77.40051,60021,75012,90021,75016,30010.00048,05017,1504,70039.35012,2503,5008,750Interest6,25010,9005,2325.668Earnings before taxes_4,2004,550ТахNet IncomeRequired:a. Based on the financial statements for ABC Manufacturing, compute the following ratios:IndustryAverage1.84Actual2018Actual2019Current ratioAcid test ratio.6637 daysAverage collection periodInventory turnover2.6 times Times interest carned3.6Debt to total assets55%Gross profit marginNet profit marginTotal asset turnover39%3.4%1.2 timesFixed asset turnover1.5 times4.3%Return on total assetsSovlveReturn on sharcholders' funds10%b. Write a brief report to the bank manager outlining the reasons why the loan should or should notbe granted.

The analysis which is used for the evaluation of the performance of an entity is known as ratio…

ABC Manufacturing Company Balance Sheet as at 31 March 2019 2018 750 10,000 12,750 _31,200 53,950 22,500 71,250 (31,200) _ 62.550 116.500 Cash 17,200 46,250 64,200 Accounts receivable Inventory Total current assets Land 27,120 Plant & equipment less accumulated depreciation Total fixed assets 100,000 (32,200) 94.920 159,120 11,500 18,250 29,750 33,700 53,050 116,500 Accounts payable Bank overdraft 24,000 49,500 73,500 27,500 58,120 159.120 Total current liabilities Term loan Sharcholders' funds ABC Manufacturing Company Income Statement for the year ended 31 March 2018 2019 129,000 _77.400 163,000 97.800 65,200 Sales Cost of goods sold Gross profit Expenses: Administrative 51,600 Operating Depreciation Total expenses Eamings before interest & tax Interest Earnings before taxes 21,750 12,900 4,700 39.350 21,750 16,300 10.000 48.050 17,150 12,250 3,500 8,750 4,200 4.550 6,250 10,900 5,232 5.668 Тах Net Income Required: a. Based on the financial statements for ABC Manufacturing, compute the following ratios: Industry Average 1.84 Actual 2019 Actual 2018 Current ratio Acid test ratio .66 Average collection period Inventory turnover 37 days 2.6 times

ABC Manufacturing Company Balance Sheet as at 31 March 2019 2018 750 10,000 12,750 _31,200 53,950 22,500 71,250 (31,200) _ 62.550 116.500 Cash 17,200 46,250 64,200 Accounts receivable Inventory Total current assets Land 27,120 Plant & equipment less accumulated depreciation Total fixed assets 100,000 (32,200) 94.920 159,120 11,500 18,250 29,750 33,700 53,050 116,500 Accounts payable Bank overdraft 24,000 49,500 73,500 27,500 58,120 159.120 Total current liabilities Term loan Sharcholders' funds ABC Manufacturing Company Income Statement for the year ended 31 March 2018 2019 129,000 _77.400 163,000 97.800 65,200 Sales Cost of goods sold Gross profit Expenses: Administrative 51,600 Operating Depreciation Total expenses Eamings before interest & tax Interest Earnings before taxes 21,750 12,900 4,700 39.350 21,750 16,300 10.000 48.050 17,150 12,250 3,500 8,750 4,200 4.550 6,250 10,900 5,232 5.668 Тах Net Income Required: a. Based on the financial statements for ABC Manufacturing, compute the following ratios: Industry Average 1.84 Actual 2019 Actual 2018 Current ratio Acid test ratio .66 Average collection period Inventory turnover 37 days 2.6 times

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.4.13P: Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of...

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