Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 2 The following information relates to two companies, Jose Limited and Juan Limited are operating in the same industry, retailing fast fashion apparels. Income

image text in transcribed

Question 2 The following information relates to two companies, Jose Limited and Juan Limited are operating in the same industry, retailing fast fashion apparels. Income Statements for the year ended 31 December 2021 Jose Limited Juan Limited $000 $000 25,000 Sales 21,000 Cost of goods sold -10,760 -8,200 Gross profit 14,240 12,800 Less: Operating expenses -7,400 -6,700 Net income 6,840 6,100 Jose Limited Juan Limited Assets $000 $000 Property, plant and equipment at net book value 13,000 12,000 Closing Inventory 2,000 1,800 Trade receivables 4,530 4,300 Cash 2,110 1,554 Total assets 21,640 19,654 Equity: Share Capital 12,000 12,000 Retained earnings 6,840 6,100 Total equity 18,840 18,100 Liabilities: 2,600 1,500 Trade payables Accruals 200 54 Total liabilities 2,800 1,554 Total liabilities and equity 21,640 19,654 a) You are required to assist the Finance manager of your company in calculating the following ratios for both the companies. i. Current Ratio. ii. Acid-Test Ratio. [3 marks] [3 marks] [3 marks] iii. Gross Profit Margin. iv. Net Profit Margin. V. Trade receivables collection period. [3 marks] [3 marks] [3 marks] vi. Trade payables payment period. b) From the results of the ratios computed, comment on the performance and financial position of the two firms. [6 marks] [Total: 24 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

Students also viewed these Accounting questions

Question

Identify several ways to make better decisions about retirement.

Answered: 1 week ago

Question

Types of Interpersonal Relationships?

Answered: 1 week ago

Question

Self-Disclosure and Interpersonal Relationships?

Answered: 1 week ago