Questions

Excerpts of financial data for Polar Enterprises are as follows: 20.9 (R) 20.10 (R) 32 011 500 19 373 000 26 180 100 15 993 700 1 931 200 1 327 800 1 831 400 1 226 420 457 850 306 600 Statement of Comprehensive Income Sales (10% credit) Cost of sales (10% credit purchases) Operating profit Profit before tax Tax (25%) Profit after tax Statement of Financial Position Non-current assets Current assets Inventories Accounts receivable Marketable securities 1 373 550 919 820 20.10 20.9 5 200 000 4 700 000 2 866 530 4 974 530 1 482 200 2038 860 261 290 155 200 326 950 2 306 440 Cash 796 090 474 030 1 088 860 588 310 Current liabilities Accounts payable 190 660 192 040 Other current liabilities 898 200 396 270 Required 2.1 Calculate the gross profit margin, operating profit margin and net profit margin for 20.10 and 20.9. (18 marks) 2.2 Comment on your answers calculated in question 2.1. (8 marks) 2.3 Calculate the current ratio and acid test ratio at the end of each year. How has the enterprise's liquidity changed over this period? (18 marks) 2.4 Compute the following for 20.10 (ratios for 20.9 are given in brackets): (23 marks) 2.4.1 Inventory turnover (20.9: 9.04 times) (6 marks) 2.4.2 Debtors collection period (20.9: 29.24 days) (3 marks) 2.4.3 Creditors payment period (20.9: 42.40 days) (9 marks) 2.4.4 Turnover to net assets (20.9 2.13) (5 marks) 2.5 What is your interpretation of the enterprise's performance with respect to your answers in question 2.4.4? (10 marks)