Question 6

The comparative balance sheet for the financial year ended June 30 for Great Road Trips is as follows:

Question 6 The comparative balance sheet for the financial year ended June 30 for Great Road Trips is as follows: Great Road Trips Ltd. Comparative Statements of Financial Position As at 30/06/2019 As at 30/06/2018 $ $ Current Assets Cash 90,000 85,000 Accounts Receivable 30,000 40,000 Less: Allowance for Bad Debts 3,900 2,400 Supplies 200 300 Prepaid Insurance 1,320 1,200 Total Current Assets 117,620 124,100 Non-current Assets Vehicles 60,000 40,000 Less: Accumulated Depreciation - Vehicles 10,000 4,000 Total Non-current Assets 50,000 36,000 TOTAL ASSETS 167,620 160,100 15,000 9,000 20,000 7,000 24,000 27,000 Current Liabilities Accounts Payable Unearned Revenue Total Current Liabilities Non-current Liabilities Long Term Loan Total Non-current Liabilities TOTAL LIABILITIES 25,000 5,000 25,000 49,000 5,000 32,000 Shareholders' Equity Contributed Capital Retained Earnings Total Shareholders' Equity 50,000 68,620 40,000 88,100 118,620 128,100 Total Liabilities & Shareholders' Equity 167,620 160,100 Required: A. Perform horizontal analysis and vertical analysis (for 2019 only) on the comparative balance sheet. In your answer please remember to indicate if it is an INCREASE or (DECREASE) and round your findings to ONE decimal place [e.g. -32.996% is -33.0% or minus 33.0% or (33.0%). B. Calculate the current ratio for 2019. C. Assuming credit sales for 2019 were $300,000 calculate the receivables turnover ratio for 2018. D. Calculate the days in receivables ratio for 2019. E. Calculate the allowance ratio for 2019. F. Comment on the significant changes disclosed by the comparative balance sheet. In your analysis include: a. The main findings from the horizontal analysis and vertical analysis b. An interpretation of what each of the ratios mean for Great Road Trips. c. The advantages and limitations of each of the ratios