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working capital management

working capital management

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 87PSB
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 Evaluate the working capital management (WCM) of both companies and draw conclusions on which is stronger.

Statements of Financial Position (SOFP) ALD Ltd Fixed assets Tangible assets Total Non Current Assets Current ass ets Trade receivables Cash at bank and in hand Total Current Assets Total Assets Liabilities Current liability: Trade payables Non current liability: Bank borrowing Total Liabilities Equity and reserves Called up share capital Profit and loss account Total Equity Total Equity and Liabilities £ 97,600 10.5% 97,600 10.5% 234,080 25.2% 598,815 64.4% 832,895 89.5% 930,495 100.0% vertical analysis 477,900 51.4% 0 477,900 3 452,592 452,595 930,495 0.0% 51.4% 0.0% 48.6% 48.6% 100.0% 4 ZEE Ltd 75,000 75,000 1,174,837 440,119 37.5% 659,718 56.2% 1,099,837 93.6% vertical analysis 680,632 6.4% 6.4% 300,763 25.6% 3 494,202 494,205 379,869 32.3% 1,174,837 100.0% 57.9% 0.0% 42.1% 42.1% 100.0%
Transcribed Image Text:Statements of Financial Position (SOFP) ALD Ltd Fixed assets Tangible assets Total Non Current Assets Current ass ets Trade receivables Cash at bank and in hand Total Current Assets Total Assets Liabilities Current liability: Trade payables Non current liability: Bank borrowing Total Liabilities Equity and reserves Called up share capital Profit and loss account Total Equity Total Equity and Liabilities £ 97,600 10.5% 97,600 10.5% 234,080 25.2% 598,815 64.4% 832,895 89.5% 930,495 100.0% vertical analysis 477,900 51.4% 0 477,900 3 452,592 452,595 930,495 0.0% 51.4% 0.0% 48.6% 48.6% 100.0% 4 ZEE Ltd 75,000 75,000 1,174,837 440,119 37.5% 659,718 56.2% 1,099,837 93.6% vertical analysis 680,632 6.4% 6.4% 300,763 25.6% 3 494,202 494,205 379,869 32.3% 1,174,837 100.0% 57.9% 0.0% 42.1% 42.1% 100.0%
Statements of Profit or Loss (SOPL) ALD Ltd Turnover Cost of sales Gross profit Administrative expenses Other operating income Operating profit 2,244,560 100% Profit for the year vertical analysis (1,127,592) 50.24% 1,116,968 49.76% (635,096) 28.29% 22,030 0.98% Other interest receivable and similar income5,500 Interest payable and similar charges 503,902 0 Profit on ordinary activities before 509,402 taxation Tax on profit on ordinary activities (56,810) 452,592 22.45% 0.25% 0.00% 22.69% 2.53% 20.16% ZEE Ltd vertical analysis £ 2,772,375 100% (751,704) 27.11% 2,020,671 (1,224,413) 44.16% 0 0.00% 796,259 2,262 0.08% (96,263) 3.47% 702,258 25.33% (208,056) 7.50% 494,202 17.83%
Transcribed Image Text:Statements of Profit or Loss (SOPL) ALD Ltd Turnover Cost of sales Gross profit Administrative expenses Other operating income Operating profit 2,244,560 100% Profit for the year vertical analysis (1,127,592) 50.24% 1,116,968 49.76% (635,096) 28.29% 22,030 0.98% Other interest receivable and similar income5,500 Interest payable and similar charges 503,902 0 Profit on ordinary activities before 509,402 taxation Tax on profit on ordinary activities (56,810) 452,592 22.45% 0.25% 0.00% 22.69% 2.53% 20.16% ZEE Ltd vertical analysis £ 2,772,375 100% (751,704) 27.11% 2,020,671 (1,224,413) 44.16% 0 0.00% 796,259 2,262 0.08% (96,263) 3.47% 702,258 25.33% (208,056) 7.50% 494,202 17.83%
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