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All non - current assets are listed at net book value on the statement of finariclat position. The interest on the company's loans is pegged
All noncurrent assets are listed at net book value on the statement of finariclat
position.
The interest on the company's loans is pegged at the central bank lending rate
plus This means that anylime interest rates increase, the interest on the
loan also increases.
Due to financial difficulties and the economic crisis, ordinary shareholders have
not been paid any dividends in the last two years. As a result, some
shareholders have begun selling off their shares.
The company expects sales to fall by in the year to October
The current interest rate on the overdraft facility is per annum.
The trade creditors of the company are threatening to reduce the level of credit
allowed to days outstanding as they are worried about being able to collect
what is due to them.
The company is considering other sources to help bridge the gap in trade
payables.
Required:
a Using gross margin and ROCE, comment on the profitability of
marks
Afrifa Ltd In your answer reflect on the impact the current
economic conditions in the UK may be having on the company.
b Using current and cash ratios, comment on the liquidity
marks
position of Afrifa Lid. In your answer reflect on the impact the
current economic conditions in the UK may be having on the
company.
c Calculate the amount of finance required to reduce trade
marks
payables, from the level shown on the statement of finaricial
position to an average of days outstanding.
d Using the information provided, discuss with appropriate ratios
marks
four options available for Afrifa Ltd for addressing the
impending issues with its creditors.
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