Extracts from the statement of comprehensive income for the year ended 31 December are as follows: Revenue Cost of sales Gross profit • ☐ C Additional information: It is the policy of the firm to mark all its goods at a constant markup of 25% on cost. The interest expense for the year ended 31 December 2023 amounted to R24 000, and for the year ended 31 December 2022, R20 000. 40% of all sales are on cash. Purchases equal 85% of cost of sales. 90% of all purchases are on credit. Assume a 365-day year. Industry-wide averages are as follows: Gross profit percentage is 33%. Net profit percentage is 20%. Trade debtors' collection period is 60 days. Trade creditors settlement periods 41 days. Inventory turnover is 8 times per year. . D E C M 2023 R a 900 000 ? 210 000 2022 R 650 000 ? 130 000 REQUIRED: Calculate the Trade debtors' collection period for both financial years ended 31 December 2023 and 2022, and interpret the results: Show the formula and your calculations. Round off all answers to 2 decimal places.

Extracts from the statement of comprehensive income for the year ended 31 December are as follows: Revenue Cost of sales Gross profit • ☐ C Additional information: It is the policy of the firm to mark all its goods at a constant markup of 25% on cost. The interest expense for the year ended 31 December 2023 amounted to R24 000, and for the year ended 31 December 2022, R20 000. 40% of all sales are on cash. Purchases equal 85% of cost of sales. 90% of all purchases are on credit. Assume a 365-day year. Industry-wide averages are as follows: Gross profit percentage is 33%. Net profit percentage is 20%. Trade debtors' collection period is 60 days. Trade creditors settlement periods 41 days. Inventory turnover is 8 times per year. . D E C M 2023 R a 900 000 ? 210 000 2022 R 650 000 ? 130 000 REQUIRED: Calculate the Trade debtors' collection period for both financial years ended 31 December 2023 and 2022, and interpret the results: Show the formula and your calculations. Round off all answers to 2 decimal places.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 6BE

See similar textbooks

Similar questions

Financial statements Each of the following items is shown in the financial statements of ExxonMobil Corporation. Identify the financial statement (balance sheet or income statement) in which each item would appear. a. Accounts payable b. Cash equivalents c. Crude oil inventory d. Equipment e. Exploration expenses f. Income taxes payable g. Investments h. Long-term debt i. Marketable securities j. Notes and loans payable k. Operating expenses l/ Prepaid taxes m. Retained earnings n Sales o Selling expenses
The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2019: Instructions 1. Prepare a multiple-step income statement. 2. Prepare a statement of owners equity. 3. Prepare a balance sheet, assuming that the current portion of the note payable is 50,000. 4. Briefly explain how multiple-step and single-step income statements differ.
Return on assets The following data (in millions) were adapted from recent financial statements of Tootsie Roll Industries Inc. (TR): Using your answers to MBA 1-3, compare the markup percentages and return on assets for Hershey and Tootle Roll.
Return on assets The following data (in millions) were adapted from recent financial statements of Tootsie Roll Industries Inc. (TR): What is Tootsie Roll’s percent of the cost of sales to sales? Round to one decimal place.
Balance Sheet Baggett Companys balance sheet accounts and amounts as of December 31, 2019, are shown in random order as follows: Required: 1. Prepare a December 31, 2019, balance sheet for Baggett. 2. Compute the debt to-assets ratio.
Classification of Assets and Liabilities Indicate the appropriate classification of each of the following as a current asset (CA), noncurrent asset (NCA), current liability (CL), or long-term liability (LTL). ______ 1. Inventory ______ 2. Accounts payable ______ 3. Cash ______ 4. Patents ______ 5. Notes payable, due in six months ______ 6. Taxes payable ______ 7. Prepaid rent (for the next nine months) ______ 8. Bonds payable, due in ten years ______ 9. Machinery
Return on assets The financial statements of The Hershey Company (HSY) are shown in Exhibits 6 through 9 of this chapter. Based upon these statements, answer the following questions. Hershey had total assets of $4,412 (million) at the beginning of the year. Compute the return on assets for Hershey for the year shown in Exhibits 6-9.
Prince Corporations accounts provided the following information at December 31, 2019: What should be the current balance of retained earnings? a. 520,000 b. 580,000 c. 610,000 d. 670,000
Ratio Analysis Rising Stars Academy provided the following information on its 2019 balance sheet and state mcnt of cash flows: Long-term debt S 4,400 Interest expense S 398 Total liabilities 8,972 Net income 559 Total assets 38,775 Interest payments 432 Total equity 29,803 Cash flows from operations 1.015 Operating income 1.223 Income tax expenses 266 Income taxes paid 150 Required: Calculate the following ratios for Rising Stars: (a) debt to equity, (b) debt to total assets, (c) long-term debt to equity, (d) times interest earned (accrual basis), and (e) times interest earned (cash basis). (Note: Round answers to three decimal places.) CONCEPTUAL CONNECTION Interpret these results. 3.What does it mean if a bond is callable