Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Neptune Ltd is a retailer of electrical products. Extracts of their financial reports are presented below: Statement of Comprehensive Income for the year ended 2

Neptune Ltd is a retailer of electrical products. Extracts of their financial reports are presented below:
Statement of Comprehensive Income for the year ended 29 February 2024
R
Sales 4500000
Cost of Sales (3865000)
Opening inventory 556000
Purchases 4024000
Closing inventory (715000)
Gross profit 635000
Operating expenses (491000)
Operating profit 144000
Interest expenses (32000)
Profit before tax 112000
Taxation (31360)
Profit after tax 80640
Statement of Financial Position as at 29 February 2024
Assets R
Non-current assets 365000
Property, plant and equipment 365000
Current assets 1125000
Inventory 715000
Debtors/Accounts receivable 352000
Bank 58000
1490000
Equity and Liabilities
Equity 664000
Ordinary share capital (@R2 stated value per share)460000
Retained earnings 204000
Non-current liabilities 324000
Loan 324000
Current liabilities 502000
Creditors/Accounts payable 502000
1490000
Note: All purchases and sales of inventories are on credit.
Management report ratios of Neptune Ltd as compared to the industry average are as follows as at 29 February 2024:
Neptune Industry
Acid test ratio 0.821.3
Current ratio 2.242.4
Inventory turnover 5.4 times 7.5 times
Return on equity 12.1%25%
Required:
4.1. Use the information provided to calculate the following ratios: (where applicable, round off answers to two decimal
places).
4.1.1. Debtors collection period (2 marks)
4.1.2. Debt to equity (2 marks)
4.1.3. Net profit margin (2 marks)
4.1.4. Earnings per share (3 marks)
4.1.5. Return on assets (3 marks)
4.1.6. Interest coverage (3 marks)
4.2. Briefly evaluate the management report ratios of Neptune Ltd as compared to the industry averages. (4 marks)
4.3. Discuss the strategies to be implemented in successfully managing inventory in a retail business. (6 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Theory and Analysis Text and Cases

Authors: Richard G. Schroeder, Myrtle W. Clark, Jack M. Cathey

12th edition

1119386209, 978-1119299349, 1119299349, 1119186331, 978-1119186335, 978-1119386209

More Books

Students also viewed these Accounting questions

Question

3. Deal with less-severe problems later.

Answered: 1 week ago