Case Study 5

Waleed Company Ltd. is a wholesaler of building and hardware materials in Muscat. 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 1,789,000 consisting of 558,000 shares of RO 2.500 each and bonds payable RO 394,000. Companys assets including building worth RO 125,000, machinery worth RO 135,000, cash available in the office RO 62,500 and at bank 37,500. At the end of 2019, the inventory reported worth RO 28,750. Later in the year company purchased furniture worth of RO 99,850. In the year 2019, company has made the sale of RO 325,800 by incurring cost of goods sold RO 199,500 and operating expenses RO 22,500. The income from other sources reported RO 45,800. Company paid interest of RO 5,000 on bonds payable in the year 2019. The total outstanding expenses and accounts payable reported RO 10,500 and RO 24,500 at the end of the year 2019.

Company also paid taxes at 15% on net profit. The dividend declared and paid 27.5% on PAT. The market value of the shares at the end of the year RO 3.750 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]