Uptodate Projects Ltd has approached you to analyse and interpret their financial statements. The following amounts were extracted from the records of the company: 2019 2020 2021 R R R Turnover 200 000 220 000 250 000 Cost of sales 140 000 150 000 165 000 Profit before interest and tax 12 000 11 000 10 500 Accounts receivable 16 500 25 000 29 600 Accounts payable 13 000 14 700 17000 Inventory 18 750 26 000 30 400 Bank/ (Overdraft) 4 000 (1000) (2 000) Required: 3.1 Explain the purpose of financial statement analysis. 3.2 Calculate each of the following ratios for each of the three (3) years: 3.2.1 Accounts receivable collection period 3.2.2 Inventory holding period 3.2.3 Accounts payable payment period 3.2.4 Current ratio 3.2.5 Acid test ratio 3.3 Comment on the company’s working capital management in light of the analysis undertaken in 3.2 above.
Uptodate Projects Ltd has approached you to analyse and interpret their financial statements.
The following amounts were extracted from the records of the company:
2019 2020 2021
R R R
Turnover 200 000 220 000 250 000
Cost of sales 140 000 150 000 165 000
Profit before interest and tax 12 000 11 000 10 500
Accounts payable 13 000 14 700 17000 Inventory 18 750 26 000 30 400
Bank/ (Overdraft) 4 000 (1000) (2 000)
Required:
3.1 Explain the purpose of financial statement analysis.
3.2 Calculate each of the following ratios for each of the three (3) years:
3.2.1 Accounts receivable collection period
3.2.2 Inventory holding period
3.2.3 Accounts payable payment period
3.2.4
3.2.5 Acid test ratio
3.3 Comment on the company’s
Step by step
Solved in 3 steps with 2 images
