QUESTION 5 REQUIRED 5.1 Use the information provided below to calculate the following ratios for 2019. Where applicable, round off answers to two decimal places. 5.1.1 Inventory turnover period 5.1.2 Trade receivables period 5.1.3 Trade payables period
QUESTION 5 REQUIRED 5.1 Use the information provided below to calculate the following ratios for 2019. Where applicable, round off answers to two decimal places. 5.1.1 Inventory turnover period 5.1.2 Trade receivables period 5.1.3 Trade payables period
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter5: Sales And Receivables
Section: Chapter Questions
Problem 87APSA
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![QUESTION 5
REQUIRED
5.1
Use the information provided below to calculate the following ratios for 2019. Where applicable, round
off answers to two decimal places.
5.1.1 Inventory turnover period
5.1.2 Trade receivables period
5.1.3 Trade payables period
5.1.4 Return on capital employed
5.1.5 Current ratia
5.1.6 Acid-test ratio
5.2 Explain how the company can improve on the following by providing twa suggestions each:
5.2.1 Inventory turnover period
5.2.2 Trade receivables period
INFORMATION
Excerpts of the financial data of Leo Limited for 2019 are as follows:
Income statement for the year ended 31 December 2019
R
Sales
3 250 000
2 200 000
332 000
Cost of sales
Operating profit
Interest expense
44 000
Profit before tax
288 000
Company tax
86 000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1b1abd7b-cc7b-4d8d-a0e9-5058c50c14e7%2Ff7d59fd4-90a3-49df-af7b-e942609bec0a%2F8x27w1gb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:QUESTION 5
REQUIRED
5.1
Use the information provided below to calculate the following ratios for 2019. Where applicable, round
off answers to two decimal places.
5.1.1 Inventory turnover period
5.1.2 Trade receivables period
5.1.3 Trade payables period
5.1.4 Return on capital employed
5.1.5 Current ratia
5.1.6 Acid-test ratio
5.2 Explain how the company can improve on the following by providing twa suggestions each:
5.2.1 Inventory turnover period
5.2.2 Trade receivables period
INFORMATION
Excerpts of the financial data of Leo Limited for 2019 are as follows:
Income statement for the year ended 31 December 2019
R
Sales
3 250 000
2 200 000
332 000
Cost of sales
Operating profit
Interest expense
44 000
Profit before tax
288 000
Company tax
86 000
![Statement of Financial Position as at 31 December:
2019
2018
R.
R
Assets
Nan-current assets
980 000
780 000
Inventories
1 300 000
1 000 000
Accounts receivable
388 000
310 000
Cash
184 000
147 000
2 852 000
2 237 000
Equity and liabilities
Ordinary share capital
Retained eamings
Long-term loan
Accounts payable
704 000
563 000
816 000
680 000
330 000
655 000
420 000
900 000
Income tax payable
12 000
9 000
2 852 000
2 237 000
Additional information
1.
All purchases and sales of inventories are on credit. The purchases for the year ended
31 December 2019 amounted to R2 500 000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1b1abd7b-cc7b-4d8d-a0e9-5058c50c14e7%2Ff7d59fd4-90a3-49df-af7b-e942609bec0a%2Frmmff5i_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Statement of Financial Position as at 31 December:
2019
2018
R.
R
Assets
Nan-current assets
980 000
780 000
Inventories
1 300 000
1 000 000
Accounts receivable
388 000
310 000
Cash
184 000
147 000
2 852 000
2 237 000
Equity and liabilities
Ordinary share capital
Retained eamings
Long-term loan
Accounts payable
704 000
563 000
816 000
680 000
330 000
655 000
420 000
900 000
Income tax payable
12 000
9 000
2 852 000
2 237 000
Additional information
1.
All purchases and sales of inventories are on credit. The purchases for the year ended
31 December 2019 amounted to R2 500 000.
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