Accounts Payable Turnover

4.4.1 Calculate the accounts payable period (in days), noting that Relo Ltd has, after tough negotiations secured a 90 day account with all its creditors. Note: Use average accounts payable for this calculation.

4.4.2 Offer constructive advice to Relo Ltd as to whether this is an ideal situation.

Calculate the return on equity. Will the shareholders be satisfied with the return? Explain why or why not.

4.6 Calculate the inventory turnover ratio (use average inventory) and describe the significance of this ratio

The following information has been extracted from the financial records of Relo Ltd for the year ended 31 December 2020 including the prior (2019) year: Statement of Financial Position as at 31 December 2020: Assets Non Current/Fixed Inventory Receivables Cash 2020 4 200 000 400 000 1 550 000 600 000 6 750 000 2019 3 000 000 600 000 1 200 000 300 000 5 100 000 Equity and Liabilities Share Capital (R2 shares) Retained Income Long term Debt Payables 4 200 000 600 000 250 000 1 700 000 6 750 000 4 000 000 300 000 200 000 600 000 5 100 000 Statement of Comprehensive Income for the year ended 31 December 2020: Sales (10% on credit) 10 200 000 Cost of sales (80% on credit) 4 080 000 Expenses 3 200 000 Net Income after Tax 2 000 000 Dividends 1 700 000 Retained Income 3 000 000 NB: Shares are currently trading at R2, 80 per share