Question 21

The information below relates to questions below:

Relevant financial information was extracted from the financial records of Mampuru Limited and presented to you in order to assist in the calculation and analysis of financial ratios for the business as at 28 February 2023, the end of the financial year.

	2023	2022
	R	R
Trade payables	39,000	33,800
Trade receivables	67,900	56,200
Other financial liabilities	188,200	213,100
Other financial assets	159,500	153,300
Inventory	92,400	27,500

Additional information:

1. Ratios reported in year ended 28 February 2022 were as follows:
   • Trade receivables collection period 88.5 days
   • Trade payables payment period 65.2 days
   • Inventory turnover rate 3.8 times
2. The gross profit percentage is 20% on sales.
3. Purchases for the year amounted to R322 000 and 66% thereof were on credit.
4. Only 22% of the total sales were cash sales.

Which of the following alternatives represents the correct trade receivables collection period of Mampuru Limited for year 2023?

a.

70.34

b.

70.74

c.

70.47

d.

90.53

e.

90.35

Question 22

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QUESTION 2 Relative to the previous financial year, which of the following alternatives represents the correct analysis of the trade receivables collection period of Mampuru Limited for year 2023?

a.

The average collection period to collect its outstanding invoices improved during the current financial year.

b.

The companys customers paid their invoices quicker compared to the previous year.

c.

The average collection period to collect its outstanding invoices remained constant during the current financial year.

d.

The companys customers took longer to pay their invoices compared to the previous year.

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Which of the following alternatives represents the correct trade payables payment period of Mampuru Limited for year 2023?

a.

62.25

b.

90.35

c.

62.52

d.

41.62

e.

41.26

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Relative to the previous financial year, which of the following alternatives represents the correct analysis of the trade payables payment period of Mampuru Limited for year 2023?

a.

The company took longer to pay the supplier invoices compared to the previous year.

b.

The time (in days) that a company took to pay its supplier invoices (trade creditors) remained the same relative to the previous year.

c.

The time (in days) that a company took to pay its supplier invoices to its trade creditors improved relative to the previous year.

d.

The time (in days) that a company took to pay its supplier invoices (trade creditors) deteriorated relative to the previous year.

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Which of the following alternatives represents the correct inventory turnover rate of Mampuru Limited for year 2023?

a.

5.29

b.

5.92

c.

7.48

d.

4.29

e.

4.92