has a good reputation in may have a damaging effect on the credit worthiness of the business END OF CHAPTER QUESTIONS QUESTION ONE The following information was obtained from the financial statements of MNT ended 28 February 2018 R Sales (cash and credit) Cost of sales Gross profit Current assets Current liabilities Inventory Debtors 400 000 200 000 200 000 100 000 50 000 30 000 40 000 20 000 Creditors Additional Information: 1. Credit sales are equal to 30% of the total sales. 2. Credit purchases for the financial year is R10 000. 3. Inventory for the previous year amounted to R 40 000 4. Debtors for the previous year amounted to R 70 000 5. Creditors for the previous year amounted to R 30 000 Advanced Diploma In Financial Management Short Term Financial Management 5 3 cate the following ralios Current Ratio Acid last Ratio 13 14 Debtors collection period 131 Creditors collection period Gross income margin (3) Comment on the liquidity position of the company calculated 131 03 Discuss reasons why a company could have low or a highstock tumeverte (4) 1 ( Current Asset Current ratio and QUESTION TWO ALTO BLTO Accounts receivable As 7000 25 000 35 000 22 000 35 000 creditors Liability 13 000 22 000 35 000 Required Calculate for both A Lid and B Lid 2.1.1 Current ratio 2.12 Acid test ratio 22 Comment on the liquidity position of each company (4) (2) B Current habililities 25 o. 35.000.000 7000 m 3600 4dan 35 00