Manager 1 Initial Request

Charlie Smith, the Financial Controller at FAB Plastics, advises that FAB Plastics is preparing for a presentation to several potential private investors and require the calculation of several financial ratios, which will form part of the presentation.

Charlie Smith provides you with a copy of the Income statement, financial position statement and statement notes for the previous reporting period. Located in Appx_Resources.

Appx_IncomeStatement

Appx_FinancialPosition

Appx_StatementNotes

Charlie Smith asks for the following ratios to be calculated. The amount identified in brackets next to each ratio is the objective:

Return on total assets (ratio = NPAT / Total assets) (2%)

Net Profit Ratio (ratio = Net income/sales revenue) (8%)

Accounts receivable collection period (ratio = Average accounts receivable / Average daily credit sales. Average daily credit sales = credit sales / 365) (35 days)

Gross profit margin ratio (ratio = Gross profit / Net sales) (50%)

Debt to Equity Ratio (ratio = Long term debt/ shareholders equity) (60%)

Current ratio (ratio = Current assets / Current liabilities) (2:1)

Inventory turnover ratio (ratio = COGS / Average inventory) (3 x pa).

Required

Using the email template provided in Table 2, write a confirmation email to Charlie Smith (Charlie.Smith@fabplastics.com.au) in relation to the initial request. Ensure that all the items below are included in the email:

confirm the financial information requested by Manager 1

clarify how the requested financial information relates to the organisations goals and objectives

confirm how the manager intends to use the information

confirm the accuracy and reliability of the financial data provided as part of the request

confirm the managers expectations, such as the due date and how the information should be presented to the manager.

Table 2 Email Template

Email template Confirmation

To: Charlie.Smith@fabplastics.com.au

From:

Subject: