3.1 Calculate liquidity and working capital ratios. (12)

3.2 Comment on the calculated ratios. (8 marks on liquidity ratios plus 5 marks on (13) working capital ratios)

QUESTION 3 [25 MARKS] BJs Ltd manufactures products that are used in the construction industry. The company has been successful in the management of its working capital and liquidity. However, 2020 has been different Calculate the working capital and liquidity ratios for Bus Ltd given the following financial information: The following is an extract of the trading account in the income statement: 2020 R'000 2,065 (1.479) 586 2019 R'000 1,789 (1.304) 485 Sales Cost of sales Gross profit Extract from the statement of financial position ASSETS Current assets Inventory Debtors (refer to note 1) Short-term investments Cash 2020 R'000 2019 R'000 119 401 4 48 572 109 347 19 48 523 EQUITY AND LIABILITIES Noncurrent liabilities Loans and overdrafts Taxes Dividend Creditors (refer to note 2) 49 62 19 371 35 47 14 324 420 501 Net current assets 71 103 Notes: 1. Amount of trade receivables in debtors amount 330 285 2. Amount of trade payables in creditors amount 236 211 The company is in the manufacturing industry. Its products are used in the construction industry. Required: (12) 3.1 Calculate liquidity and working capital ratios. 3.2 Comment on the calculated ratios. (8 marks on liquidity ratios plus 5 marks on working capital ratios) (13)