Case Study 5

Sohail Company Ltd. is a wholesaler of building materials in Salalah governorate. Company furnished the following information to measure its performance by using different ratios for the year 2019: -

Company started its business with share capital and debts of RO 2,255,000 consisting of 395,000 shares of RO 4.750 each and bonds payable RO 378,750. Companys assets including building worth RO 275,000, machinery worth RO 145,000, cash available in the office RO 12,500 and at bank 120,500. At the end of 2019, the inventory reported worth RO 98,750. Later in the year company purchased furniture worth of RO 45,800. In the year 2019, company has made the sale of RO 1,325,800 by incurring cost of goods sold RO 795,000 and operating expenses RO 132,500. The income from other sources reported RO 55,700. Company paid interest of RO 14,000 on bonds payable in the year 2019. The total outstanding expenses and accounts payable reported RO 12,800 and RO 84,500 at the end of the year 2019.

Company also paid taxes at 15% on net profit. The dividend declared and paid 17.5% on PAT. The market value of the shares at the end of the year RO 6.350 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]
3. Current and Quick Ratio by showing all required calculations and formulas. [2 Marks]