Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
QUESTION 6 (continued) Required: (Show all calculations and round ALL answers to 2 decimal places.) a. Calculate the following ratios for Indigo Limited for the
QUESTION 6 (continued) Required: (Show all calculations and round ALL answers to 2 decimal places.) a. Calculate the following ratios for Indigo Limited for the year 2019: (14 marks) i) Current ratio ii) Quick ratio it) Return on assets iv) Return on equity v) Inventory turnover rate vi) Earnings per share b. Based on the ratios calculated in (a), explain to a shareholder why the current ratio and the quick ratio are different. Do you observe any liquidity problems of Indigo Limited? Explain. (6 marks) h QUESTION 6 (20 marks) 2018 The financial statements of Indigo Limited are as follows. Indigo Limited Statement of Financial Position As at December 31, 2019 and 2018 2019 Assets Current assets Cash $22,500 Accounts receivable 100,000 Inventory 57,500 Prepaid insurance 15.000 Total current assets 195,000 Property, plant and equipment, net 600,000 Total assets $795,000 $15,000 127,500 22,500 22.500 187,500 472.500 5660.000 Liabilities Current liabilities Accounts payable Salaries payable Total current liabilities Noncurrent liabilities Total liabilities $60,000 37.500 $97,500 112.500 210.000 $75.000 60.000 S135.000 225.000 360.000 Shareholders' Equity Ordinary shares. S100 par Retained earings Total shareholders equity Total liabilities and equity S435.000 150.000 385.000 5795.000 $225,000 75.000 300.000 S660.000 Indigo Limited Income Statement For the year ended December 31, 2019 2019 Sales call on credit) S600,000 Less: Cost of goods sold 315.000 Gross profit 285.000 Less Operating expenses $2.500 Operating profil 202.500 Less Income tax expense 40,500 Profit for the year $ 162.000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started