Question
QUESTION 3 [25 MARKS] BJs Ltd manufactures products that are used in the construction industry. The company has been successful in the management of its
QUESTION 3 [25 MARKS] BJs Ltd manufactures products that are used in the construction industry. The company has been successful in the management of its working capital and liquidity. However, 2020 has been different. Calculate the working capital and liquidity ratios for BJs Ltd given the following financial information
The following is an extract of the trading account in the income statement:
| 2020 | 2019 | |
| R'000 | R'000 | |
| Sales | 2,065 | 1,789 |
| Cost of sales | (1,479) | (1,304) |
| Gross profit | 586 | 485 |
Extract Statement From financial position
| Assets | 2020 | 2019 |
| R'000 | R'000 | |
| Current Assets | ||
| Inventory | 119 | 109 |
| Debtors (refer to note1) | 401 | 347 |
| Short term investments | 4 | 19 |
| Cash | 48 | 48 |
| 572 | 523 | |
| EQUITY AND LIABILITIES | ||
| Noncurrent liabilities | 49 | 35 |
| Taxes | 62 | 47 |
| Dividend | 19 | 14 |
| Creditors (refer to note 2) | 371 | 324 |
| 501 | 420 | |
| Net current assets | 71 | 103 |
| Notes | ||
| 1. Ammount of trades receivable in debtors amount | 330 | 285 |
| 2.Amount of trades payables in creditors amount | 226 | 211 |
3.1 Calculate liquidity and working capital ratios. (posted separate)
3.2 Comment on the calculated ratios. (8 marks on liquidity ratios plus 5 marks on (13) working capital ratios)
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Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
0130674842, 978-0130674845
