Question 4 [35]

The following information relates to the telecommunication equipment industry and the semiconductor industry. Motorola Corporation is a leading manufacturer and supplier in the telecommunications industry. The information provided below includes selected financial information relating to Motorola Corporation together with comparative financial ratios from the two industries. The information provided has been adapted to suit the questions.

The telecommunications industry is extremely competitive and includes major corporations such as AT & T Inc., Verizon Communications Inc., Motorola and many others.

Extracts from the financial statements and selected financial ratios for Motorola Corporation

2019

2018

2017

2016

R000s

R000s

R000s

R000s

Cash and cash equivalents Short-term investments Accounts receivable, net Inventories, net

Other current assets

Total current assets

Notes payable and current portion of long-term debt Accounts payable Accrued liabilities

Total current liabilities

Current ratio Quick ratio

6 507 59 4 437 2 869 3 262 17 134

1 524

2 268 5 913 9 705 1.77 1.47

6 082 80 4 583 2 756 3 648 17 149

870

2 434

6 394

9 698

1.77 1.22 1.36 1.48 0.90 1.08

3 301 354 7 092 5 242 3 896 19 885

6 391

3 537 699 5 627

3 707

4 015

17 585

2 504

3 492

3 285

6 374

7 117

16 257

12 906

Selected financial ratios for Motorola Corporation and the telecommunications equipment and semiconductor industries.

Motorola

Semiconductor industry

Telecommunication equipment industry

Current ratio

Quick ratio

Average collection period Inventory turnover

1.77

1.47 61 days 6.25

2.44

2.08 50 days 6.01

1.52

1.23 73 days 5.66

Required:

4.1. Use the information provided to calculate Motorolas net working capital for each of the years 20162019. (8)

Question 4

The following information relates to the telecommunication equipment industry and the semiconductor industry. Motorola Corporation is a leading manufacturer and supplier in the telecommunications industry. The information provided below includes selected financial information relating to Motorola Corporation together with comparative financial ratios from the two industries. The information provided has been adapted to suit the questions.

The telecommunications industry is extremely competitive and includes major corporations such as AT & T Inc., Verizon Communications Inc., Motorola and many others.

Extracts from the financial statements and selected financial ratios for Motorola Corporation

2019

2018

2017

2016

R000s

R000s

R000s

R000s

Cash and cash equivalents Short-term investments Accounts receivable, net Inventories, net

Other current assets

Total current assets

Notes payable and current portion of long-term debt Accounts payable Accrued liabilities

Total current liabilities

Current ratio Quick ratio

6 507 59 4 437 2 869 3 262 17 134

1 524

2 268 5 913 9 705 1.77 1.47

6 082 80 4 583 2 756 3 648 17 149

870

2 434

6 394

9 698

1.77 1.22 1.36 1.48 0.90 1.08

3 301 354 7 092 5 242 3 896 19 885

6 391

3 537 699 5 627

3 707

4 015

17 585

2 504

3 492

3 285

6 374

7 117

16 257

12 906

Selected financial ratios for Motorola Corporation and the telecommunications equipment and semiconductor industries.

Motorola

Semiconductor industry

Telecommunication equipment industry

Current ratio

Quick ratio

Average collection period Inventory turnover

1.77

1.47 61 days 6.25

2.44

2.08 50 days 6.01

1.52

1.23 73 days 5.66

Required:

4.1. Use the information provided to calculate Motorolas net working capital for each of the years 20162019. (8)