Question:

The following attachments are the financial statements of two companies listed in Amman Stock Exchange (ASE) for the years of 2017 to 2019.

Requirements:

a.Compute the following ratios for both companies:

i. Working capital

ii. Current ratio

iii. Acid test ratio

iv. Cash flow from operations to current liabilities

v. Accounts receivable turnover ratio

vi. Days in receivables

vii. Inventory turnover ratio

viii. Average days in inventory

b.Based on the previous ratios discuss the working capital management and assess the relative working capital position for both companies.

Assets (JD) Cash on Hand & at Banks Accounts Receivable Net Notes Receivable Post Dated Cheques Short Term Investments Inventory Spare Parts Total Current Assets Long Term Investments Fixed Assets Net Lands Projects in Progress Total Fixed Assets Other Assets Total Assets Liabilities (JD) 2019 2018 2017 2766769 537065 3436403 2491603 3473663 1961202 0 0 0 455782 22159 4924 0 0 0 3425530 2857272 2746000 0 0 0 9837037 7784084 8959174 11886972 14799040 13195988 4877614 5387213 6768383 948870 948870 0 872830 23902 0 6699314 6359985 6768383 195692 155046 39111 28619015 29098155 28962656 Liabilities (JD) Accounts and Notes Payable Credit Banks Short Term Loans Accrued Part of Long Term Loans Total Current Liabilities Long Term Loans & Notes Payable Corporate Bonds Other Liabilities Total Liabilities Shareholders Equity (JD) 2019 1518575 0 0 0 3894235 0 0 17617 3911852 2018 1191928 0 0 0 3159909 0 0 23811 3183720 2017 910586 0 0 0 3142654 0 0 55554 3198208 Authorized Capital Subscribed Capital Paid in Capital Compulsory Reserves Voluntary Reserve Other Reserves Issuance Premium Issuance Discount Treasury Stocks Cash Dividends Stock Dividends Accumulated Change in Fair Value Retained Earnings Total Shareholders Equity Non-controlling Interest Total Liabilities & Shareholders Equity Income Statement (JD) 2019 2018 2017 10000000 10000000 10000000 10000000 10000000 10000000 10000000 10000000 10000000 6261251 5914384 5792126 2155018 2155018 2155018 0 0 0 0 0 0 0 0 0 0 0 0 2000000 1200000 1200000 0 0 0 1094547 3501357 3179602 3196347 3143676 3437702 24707163 25914435 25764448 0 0 0 28619015 29098155 28962656 Income Statement (JD) 2017 Operating Revenues Operating Expenses Gross Profit General and Administrative Expenses Selling and Distribution Expenses Depreciation (Period) Other Operating Expenses Net Operating Income Other Revenues Other Expenses Income Before Interest & Tax Interest Expenses Net Income Before Tax Income Tax (Period) Income Tax (Previous Years) Universities and Research Train Fees Board of Directors Remuniration Net Income Non-controlling Interest Net Income Pertains to Shareholders Cash Flow (JD) 2019 2018 11699191 10245026 8831190 6401950 6989007 5094168 5297241 3256019 3737022 1508145 1170094 816864 1352626 1262194 1530408 955479 1001824 917532 224623 288832 59942 2211847 534899 1329808 764364 769912 754609 54275 50577 31326 2921936 1254234 2053091 0 0 0 2921936 1254234 2053091 491565 194348 242745 0 0 0 0 0 0 30833 31654 30821 2399538 1028232 1779525 0 0 0 2399538 1028232 1779525 Cash Balance (Beginning) Net Cash Flow from (Used in) Operating Activities Net Cash Flow from (Used in) Investing Activities Net Cash Flow from (Used in) Financing Activities Cash Balance (Ending) 2019 537065 3150850 -26229 -894917 2766769 2018 3436403 -840470 -1150444 -908424 537065 2017 3126026 1566999 -252902 -1003720 3436403