Case Study 5

Arif Company Ltd. is a wholesaler of electronic parts in Muscat region. The following information is furnished by company in order to assess its performance by using different ratios for the year 2019: -

Company started its business with a share capital and debts of RO 375,500 consisting of 45,500 shares of RO 4.500 each and bank loans RO 170,750. Companys assets including building worth RO 55,000, machinery worth RO 35,000, cash available in the office RO 22,500 and at bank 35,500. At the end of 2019, the inventory reported worth RO 34,750. Later in the year company purchased furniture worth of RO 10,450. In the year 2019, company has made the sale of RO 135,400 by incurring cost of goods sold RO 69,250 and operating expenses RO 32,500. The income from other sources reported RO 5,800. Company paid interest of RO 6,200 on bank loans in the year 2019. The total outstanding expenses and accounts payable reported RO 5,300 and RO 14,500 at the end of the year 2019.

Company also paid taxes at 15% on net profit. The dividend declared and paid 12.5% on PAT. The market value of the shares at the end of the year RO 6.50 each.

Requirements: - Calculate the following ratios: -

1. Shareholders Ratios by showing all required calculations and formulas. [4 Marks]
2. Profitability Ratios by showing all required calculations and formulas. [4 Marks]

Current and Quick Ratio by showing all required calculations and formulas.