that 1. Assume that you are the Chief Executive Officer of the XYZ Company Ltd an importer, manufacturer and distributor of electrical equipments in Tanzania. The company sells its goods on terms of 2/10, net 30 and extracts from its financial statements over the last 3 years are presented in the table below (figures in Tshs million): 2017 2018 2019 Assume further that of late you have become concerned about the performance of your company in lieu of the current competitive markets resulting out of the many companies have mushroomed specializing in the same business. In order to position your company adequately and make appropriate recommendations to the Board you have asked the company's Accountant to give you any valuable information there might be regarding the company's performance. He has responded by computing and submitting the following ratios to you. Kash Accounts receivable 200 200 200 Inventory 400 40 000 Net Fixed Assets SOGNO 1.400 ISO 1.699 Accounts payable 230 370 380 Accruals 200 210 223 Bankban, short term 100 100 100 Long-term debe 3000 300 Common stock 100 100 100 Retained Earnings Sod so 1.400 ISO 1.699 2017 2018 2019 Current ratio 1.19 1.25 1.20 Acid-test ratio 10.43 0.46 0.40 Average collection period 1822 27 Inventory turnover NA3.261 Total debt to net worth 1.38 1.40161 Long-term debt to totalenpitalition 0.33 0.32 0.12 Cross profit margin 0 200 1630-132 Net profit margin 10.0751.047|0,026 Asset over 2.80 2.762.24 Return to 0.21 0.13 0.06 Required: (i) Only using the information available analyze the company's financial condition and performance over the last 3 years and evaluate whether the company is facing any problems? What would you say to the Company's Board of Directors regarding the financial health of the company? (ii) Highlight the potential problems that you might encounter in using ratio analysis to analyze the financial health and performance of your company? Sales OVO UNDE Cost of goods sold 200 300 Net Profit 300 200 101 30 1. Assume that you are the Chief Executive Officer of the XYZ Company Ltd an importer, manufacturer and distributor of electrical equipments in Tanzania. The company sells its goods on terms of 2/10, net 30 and extracts from its financial statements over the last 3 years are presented in the table below (figures in Tshs million): 2017 2018 2019 Cash 201 51 Accounts receivable 200 2001 290 Inventory 600 Net Fixed Assets 800 800 800 1.4301,580 1.695 Accounts payable 230 320 3801 Accruals 200 2101 225 Bank loan, short term 100 100 1401 Long-term debt 300 300 300 Common stock Retained Earnings 5000 550 550 1.4301.580 1.695 400 480 100 100 100 Sales |4,0004,300 3,800 Cost of goods sold 3,200 3,600 3,300 Net Profit 300 200) 100 Assume further that of late you have become concerned about the performance of your company in lieu of the current competitive markets resulting out of the many companies that have mushroomed specializing in the same business. In order to position your company adequately and make appropriate recommendations to the Board you have asked the company's Accountant to give you any valuable information there might be regarding the company's performance. He has responded by computing and submitting the following ratios to you. NA 8.2 2017 2018 2019 Current ratio 1.19 1.25 1.20 Acid-test ratio 0.43 0.46 0.40 Average collection period 18 22 27 Inventory turnover 6.1 Total debt to net worth 1.38 1.401.61 Long-term debt to total capitalization 0.33 0.32 0.32 Gross profit margin 10.2000.163/0.132 Net profit margin 0.07510.047|0.026 Asset turnover 2.80 2.762.24 Return to assets 0.21 0.13 0.06 Required: (i) Only using the information available analyze the company's financial condition and performance over the last 3 years and evaluate whether the company is facing any problems? What would you say to the Company's Board of Directors regarding the financial health of the company? (ii) Highlight the potential problems that you might encounter in using ratio analysis to analyze the financial health and performance of your company
