a. Compute the following ratios:i. Accounts Receivable Turnover ratio;ii. Accounts Payable Turnover ratio;iii. Average Collection Period;iv. Average Payable Period;v. Quick Ratio;vi. Gross Profit Margin.vii. Net Profit Marginviii. Debt ratiobb. Explain briefly what is factoring? Income Statement for the year Ended 31 December 2016Garth Ltd.James Ltd.$'000$'000$'000$'000Sales revenue1 1921 356Cost of Sales|(788)(1 052)Gross Profit404304Expenses:Administrative7290Selling $ Dist.106112Depreciation2838Loan note interest(206)16(256)Net Profit198481 SECTION AInstructions: Answer ALL questions from this section.Daniel, an investor is considering purchasing shares in either Garth Ltd & James Ltd. Bothcompanies are in the same line of business and their accounts are summarized below:Statement of financial Poion as at December 1st 2016AssetsGarth LtdJames Ltd.Non Current Assets$'000$'000S'000$'000At Cost8402 140Accumulated Depreciation(226)614(280)1 852Current AssetsInventory276334Receivables138196Bank and Cash192606185481 2202 400Equity and Liabilities1 800СapitalRetained Earnings7403401381 0801 938Non-Current Liabilities10 % loan Note160Current Liabilities240Trade payablesInterest payable120Income tax20140603021 220240

Here we have to calculate and determine the different mentioned financial ratios.

Compute the following ratios: i. Accounts Receivable Turnover ratio; ii. Accounts Payable Turnover ratio; iii. Average Collection Period; iv. Average Payable Period; v. Quick Ratio; vi. Gross Profit Margin. vii. Net Profit Margin viii. Debt ratiob b. Explain briefly what is factoring?

Compute the following ratios: i. Accounts Receivable Turnover ratio; ii. Accounts Payable Turnover ratio; iii. Average Collection Period; iv. Average Payable Period; v. Quick Ratio; vi. Gross Profit Margin. vii. Net Profit Margin viii. Debt ratiob b. Explain briefly what is factoring?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 25E

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