Question
2.1 The extracts of the financial statements of Zambezi Limited for 2020 and 2019 are provided below. INFORMATION Zambezi Limited Extract of Statement of Comprehensive
2.1 The extracts of the financial statements of Zambezi Limited for 2020 and 2019 are provided below.
INFORMATION
| Zambezi Limited Extract of Statement of Comprehensive Income for the year ended 31 December 2020 |
| |||
|
| R | |||
| Sales (all credit) | 1 920 000 | |||
| Cost of sales | 1 200 000 | |||
| Gross Profit | ? | |||
| Extract of the Statement of financial Position 31 December 2020: | 2020 | 2019 | ||
|
| (R) | (R) | ||
| Inventories | 532 000 | 480 000 | ||
| Accounts Receivable | 300 000 | 504 000 | ||
| Cash and cash equivalents | 440 000 | 336 000 | ||
| Current Liabilities | 408 000 | 360 000 | ||
REQUIRED
Calculate the following for 2020. Where applicable, round off answers to two decimal places.
2.1 Gross Profit (2 marks)
2.2 Calculate the following ratios
Gross Profit Margin (5 marks)
2.3 Debtors collection period (5 marks)
2.4 Current ratio (5 marks)
2.5 Acid test ratio (5 marks)
2.6 Given that the industry average for Gross profit margin is 42%, comment on Zambezis Gross
profit margin?
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Contemporary Auditing
Authors: Michael C Knapp
12th Edition
357515404, 978-0357515402
