Ltd for the year ended 28 February 2023:

R Sales 500 000

Cost of Sales 300 000

Gross Profit 200 000

Current Assets 150 000

Current Liabilities 50 000

Inventory 50 000

Debtors 80 000

Creditors 40 000

Additional Information:

Credit sales are equal to 20% of the total sales.

Credit purchases for the financial year is R20 000.

Inventory for the previous year amounted to R 50 000.

Debtors for the previous year amounted to R 80 000.

Creditors for the previous year amounted to R 40 000.

REQUIRED:

4.1 Calculate the Current Ratio.

4.2 Calculate the Acid-test Ratio

4.3 Calculate the Stock turnover rate

4.4 Calculate Debtors collection period

4.5 Calculate the Creditors payment period

4.6 Analyse the liquidity position of the business from the above calculations.

4.7 Outline the reasons for a company having a:

4.7.1 High stock turnover

4.7.2 Low stock turnover