The following balances are extracted from the books of XYZ Ltd at the end of May 2008 and 2009. 2009 2008 Details Kshs Kshs Debtors 105,000 85,000 Stock 35,000 45,000 Creditors 63,000 40,000 Provision for taxation 25,000 20,000 Proposed dividend 30,000 30,000 Bank overdraft 17,000 25,000 Sales 1,200,000 1,200,000 Purchases 1,000,000 1,000,000 Required (a) Calculate liquidity ratios and interpret your answer (b) Calculate Average Collection Period for the 2 years’ (c) Calculate Average Payment Period for the 2 years (d) Interpret your answers.

Name: The following balances are extracted from the books of XYZ Ltd at the
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Description: The following balances are extracted from the books of XYZ Ltd at the end of May 2008 and 2009. 2009 2008 Details Kshs Kshs Debtors

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Answered: Required (a) Calculate liquidity…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 55E: Rebert Inc. showed the following balances for last year: Reberts net income for last year was...

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The following balances are extracted from the books of XYZ Ltd at the end of May 2008 and 2009.
	2009	2008
Details	Kshs	Kshs
Debtors	105,000	85,000
Stock	35,000	45,000
Creditors	63,000	40,000
Provision for taxation	25,000	20,000
Proposed dividend	30,000	30,000
Bank overdraft	17,000	25,000
Sales	1,200,000	1,200,000
Purchases	1,000,000	1,000,000

Required
(a) Calculate liquidity ratios and interpret your answer
(b) Calculate Average Collection Period for the 2 years’
(c) Calculate Average Payment Period for the 2 years
(d) Interpret your answers.

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