Answered step by step
Verified Expert Solution
Question
1 Approved Answer
CapeTown Elite Coffee ( Pty ) Ltd . , is an up - and - coming high - quality coffee shop based in Cape Town.
CapeTown Elite Coffee Pty Ltd is an upandcoming highquality coffee shop based in Cape Town. The company has a June financial yearend. You have been presented with the final trial balance of CapeTown Elite Coffee Pty Ltd:
Final Extract of the trial balance of CapeTown Elite Coffee Pty Ltd at June:
Account Item
Rands
Debits
Rands
Credits
Rands
Debits
Rands
Credits
Bank
Shortterm investments
Trade and other receivables
Inventories Coffee beans, snacks, etc.
Property, plant, and equipment PPE
Accumulated depreciation PPE
Trade and other payables
Shortterm borrowings
Longterm borrowings
Owner's equity capital and reserves
Revenue
Cost of sales
Operating expenses
Interest expense
Taxation
Dividends declared
ANNEXURE J: SUMMATIVE ASSESSMENT
HFACJanJunSALVNV
Additional notes:
Growth:
CapeTown Elite Coffee Pty Ltd experienced robust growth in primarily driven by an increase in customer demand. This growth was attributed to the company's unique position as the sole premium coffee provider in the area, which captured a larger market share and drew in more customers.
Sales Growth:
The company observed significant sales growth, a direct result of broadening its customer base. This was achieved not just through highquality service but also by introducing new and innovative products, such as exclusive coffee blends and gourmet snacks, which resonated well with the customer's evolving preferences.
Asset Acquisition:
In CapeTown Elite Coffee Pty Ltd strategically invested in the latest coffeemaking equipment and expanded its seating capacity by purchasing additional tables and chairs. These actions were taken to enhance the customer experience and to cater to the increasing customer footfall, ensuring the infrastructure supports the company's growth trajectory.
Depreciation:
CapeTown Elite Coffee Pty Ltd applies the straightline depreciation method. As a result, there was a consistent increase in the accumulated depreciation of the property, plant, and equipment, reflecting the systematic allocation of the cost of these assets over their useful lives.
Liabilities:
The company made significant strides in strengthening its financial stability by repaying portions of its shortterm and longterm debt. This proactive approach to debt management underscores CapeTown Elite Coffee Pty Ltds commitment to maintaining a robust statement of financial position balance sheet
Equity:
The increase in equity for the year reflects the company's financial health, primarily due to the retention of earnings after accounting for dividend payments and other equity transactions. This indicates that the profits generated during the year were substantial, bolstering the company's reserves and overall financial position.
ANNEXURE J: SUMMATIVE ASSESSMENT
HFACJanJunSALVNV
Cost of sales and Operating expenses:
The cost of sales and operating expenses witnessed an uptick, in line with the expansion in sales volume and the scaling up of business operations. This increase is reflective of the company's investment in quality and capacity to support the higher demand and ensure sustained growth.
REQUIRED:
Calculate the following financial ratios of CapeTown Elite Coffee Pty Ltd for the financial year and provide brief feedback on each variance:
Income growth
Asset growth
Profit margin
Return on assets
Return on equity
Dividend payout ratio
Receivable turnover
Inventory turnover
Current ratio
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started