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Posted on Aug 07, 2024

QUESTION FOUR The following is an extract from the Annual report of two listed companies. Company Number 1: Statement of Financial Position Anna March 2016

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QUESTION FOUR The following is an extract from the Annual report of two listed companies. Company Number 1: Statement of Financial Position Anna March 2016 LIR EL ERR Property and brant ang Other Race 13 4.000, 109,774 4,24,000,000 574,587,581 100,002,607 8177.710,342 420.000 4.764.517 05.000 679 . D A www Taded Income Tax Receive CE 15 7,312,000,04 .. 1.454,555,800 1,084,014.15 241 878.185 7.112.109,157 7101400 15.00, 171,516 14,16 25.087.882,158 23,541,00 500 Sacita 7.676,573,000 7,376,672.900 10,808,897,357 10,54,00 18.385,471,45738.124.000 580 Dutno BO This 8 3.1 65.847,000 39.100,015 156.455,573 01.087.730 54E 179 CL Tiade and they recome fax at Big Bow 16,680,065 1,300, 108 431,332 2. 202,843,7293,207,7705 0.027,955,1367 26,087,882,168 29,041,200.000 Company Number 2: CURRENT ASSETS 1,570,577 152.242 2,301,441 307,466 1,521,808 198,999 2558.126 385,161 Inventories Biological assets Trade and other receivables Tax recoverable Amounts due from subsidiaries Amounts due trom former fellow subsidiaries Amounts due from related parties Derivatives Bank balances deposits and cash 28 18 27 26 29 29 29 30 43,031 2.559 57.226 363,238 4,754,749 56,184 713,448 5.476,757 32 183,594 Non-current assets held for sale TOTAL ASSETS 218,964 27,491,675 29,454.877 CURRENT LIABILITIES 42 1,588,102 19,275 41 1772.710 26,707 145,392 1441,523 Trade and other payables Deferred Income Amount due to former immediate holding company Amounts due to subsidiaries Amounts due to former fellow subsidiaries Amounts due to related parties Retirement benefits Finance lease obligations Tax payable Derivatives Borrowings 29 29 29 29 38 40 54,104 10,485 823 160,509 24,502 1,094,194 2.951,994 30 2,993 267.720 27.732 325 449 5.010,241 59 32 Llabilities directly associated with non-current assets held for sale TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES 45,993 11,177,873 27,491,675 15.395 14 331.522 29.454 877 REQUIRED: a. For each company, compute the following ratios (ignore the years): No Ratio Co.1 Yr 1 Co.1 Yr 2 Co.2 Yr1 Co.2 Yr 2 1 2. 3. 4. 5. Current Ratio Gearing Cash Ratio - 1 Cash Ratio - 2 Asset Financing Formula Clue CA / CL TL / EQ Cash / CL Cash/TA TB/TA [ 10 marks] b. Explain which company's ratio is "healthier" No Ratio Which Company Ratio is better? Explain your reason 1 2. 3. 4. 5. Current Ratio Gearing Cash Ratio - 1 Cash Ratio - 2 Asset Financing [10 marks ] c. Write a short note to explain the importance of positive working capital, i.e. where the Current Ratio is greater than 1. QUESTION FOUR The following is an extract from the Annual report of two listed companies. Company Number 1: Statement of Financial Position Anna March 2016 LIR EL ERR Property and brant ang Other Race 13 4.000, 109,774 4,24,000,000 574,587,581 100,002,607 8177.710,342 420.000 4.764.517 05.000 679 . D A www Taded Income Tax Receive CE 15 7,312,000,04 .. 1.454,555,800 1,084,014.15 241 878.185 7.112.109,157 7101400 15.00, 171,516 14,16 25.087.882,158 23,541,00 500 Sacita 7.676,573,000 7,376,672.900 10,808,897,357 10,54,00 18.385,471,45738.124.000 580 Dutno BO This 8 3.1 65.847,000 39.100,015 156.455,573 01.087.730 54E 179 CL Tiade and they recome fax at Big Bow 16,680,065 1,300, 108 431,332 2. 202,843,7293,207,7705 0.027,955,1367 26,087,882,168 29,041,200.000 Company Number 2: CURRENT ASSETS 1,570,577 152.242 2,301,441 307,466 1,521,808 198,999 2558.126 385,161 Inventories Biological assets Trade and other receivables Tax recoverable Amounts due from subsidiaries Amounts due trom former fellow subsidiaries Amounts due from related parties Derivatives Bank balances deposits and cash 28 18 27 26 29 29 29 30 43,031 2.559 57.226 363,238 4,754,749 56,184 713,448 5.476,757 32 183,594 Non-current assets held for sale TOTAL ASSETS 218,964 27,491,675 29,454.877 CURRENT LIABILITIES 42 1,588,102 19,275 41 1772.710 26,707 145,392 1441,523 Trade and other payables Deferred Income Amount due to former immediate holding company Amounts due to subsidiaries Amounts due to former fellow subsidiaries Amounts due to related parties Retirement benefits Finance lease obligations Tax payable Derivatives Borrowings 29 29 29 29 38 40 54,104 10,485 823 160,509 24,502 1,094,194 2.951,994 30 2,993 267.720 27.732 325 449 5.010,241 59 32 Llabilities directly associated with non-current assets held for sale TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES 45,993 11,177,873 27,491,675 15.395 14 331.522 29.454 877 REQUIRED: a. For each company, compute the following ratios (ignore the years): No Ratio Co.1 Yr 1 Co.1 Yr 2 Co.2 Yr1 Co.2 Yr 2 1 2. 3. 4. 5. Current Ratio Gearing Cash Ratio - 1 Cash Ratio - 2 Asset Financing Formula Clue CA / CL TL / EQ Cash / CL Cash/TA TB/TA [ 10 marks] b. Explain which company's ratio is "healthier" No Ratio Which Company Ratio is better? Explain your reason 1 2. 3. 4. 5. Current Ratio Gearing Cash Ratio - 1 Cash Ratio - 2 Asset Financing [10 marks ] c. Write a short note to explain the importance of positive working capital, i.e. where the Current Ratio is greater than 1