Q.9 The following information has been extracted from the accounts of Witton Way Inc. Income statement for the 2008 Rs.000 2009 Rs.000 year to 30 April 2009 Turnover (all credit sales) 7,650 11,500 Less Cost of sales (5.800) (9.430) Gross profit 1,850 2,070 Other expenses (150) (170) Loan interest (50) (350) Profit before taxation 1.650 1,550 Taxation (600) (550) Profit after taxation 1,050 1,000 Dividends (all ordinary shares) (300) (300) Retained profits 750 700 Balance sheet at 30 April 2009 2008 2009 Rs.000 Rs.000 Assets Non-current assets 10.050 11,350 Tangible assets Current assets Inventories. 1,500 2,450 Trade receivables 1,200 3,800 Cash 900 30 3,600 6,300 13,650 17,650 Equity and liabilities Capital and reserves Called-up share capital 5,900 5,900 Retained earnings 5,000 5,700 10,900 11,600 Non-current liabilities 350 3,360 Current liabilities 2,400 2,700 13,650 17,650 Additional information During the year to 30 April 2009 the company tried to stimulate sales by reducing the selling price of its products and by offering more generous credit terms to its customers. Required: Calculate each of the following ratios for the two years ended 30 April 2008 and 2009. (a) Gross profit ratio. (b) Return on capital employed. (c) Current ratio. (d) Acid test ratio. (e) Trade receivable collection period. (f) Inventory turnover. and comment on your findings. 10
Q.9 The following information has been extracted from the accounts of Witton Way Inc. Income statement for the 2008 Rs.000 2009 Rs.000 year to 30 April 2009 Turnover (all credit sales) 7,650 11,500 Less Cost of sales (5.800) (9.430) Gross profit 1,850 2,070 Other expenses (150) (170) Loan interest (50) (350) Profit before taxation 1.650 1,550 Taxation (600) (550) Profit after taxation 1,050 1,000 Dividends (all ordinary shares) (300) (300) Retained profits 750 700 Balance sheet at 30 April 2009 2008 2009 Rs.000 Rs.000 Assets Non-current assets 10.050 11,350 Tangible assets Current assets Inventories. 1,500 2,450 Trade receivables 1,200 3,800 Cash 900 30 3,600 6,300 13,650 17,650 Equity and liabilities Capital and reserves Called-up share capital 5,900 5,900 Retained earnings 5,000 5,700 10,900 11,600 Non-current liabilities 350 3,360 Current liabilities 2,400 2,700 13,650 17,650 Additional information During the year to 30 April 2009 the company tried to stimulate sales by reducing the selling price of its products and by offering more generous credit terms to its customers. Required: Calculate each of the following ratios for the two years ended 30 April 2008 and 2009. (a) Gross profit ratio. (b) Return on capital employed. (c) Current ratio. (d) Acid test ratio. (e) Trade receivable collection period. (f) Inventory turnover. and comment on your findings. 10
Fundamentals of Financial Management (MindTap Course List)
15th Edition
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter4: Analysis Of Financial Statements
Section: Chapter Questions
Problem 24P: Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of...
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Transcribed Image Text:Q.9
The following information has been extracted from the accounts
of Witton Way Inc.
Income statement for the 2008 Rs.000
2009 Rs.000
year to 30 April 2009
Turnover (all credit sales)
7,650
11,500
Less Cost of sales
(5.800)
(9.430)
Gross profit
1,850
2,070
Other expenses
(150)
(170)
Loan interest
(50)
(350)
Profit before taxation
1.650
1,550
Taxation
(600)
(550)
Profit after taxation
1,050
1,000
Dividends (all ordinary shares) (300)
(300)
Retained profits
750
700
Balance sheet at 30 April
2009
2008
2009
Rs.000
Rs.000
Assets
Non-current assets
10.050
11,350
Tangible assets
Current assets
Inventories.
1,500
2,450
Trade receivables
1,200
3,800
Cash
900
30
3,600
6,300
13,650
17,650
Equity and liabilities
Capital and reserves
Called-up share capital
5,900
5,900
Retained earnings
5,000
5,700
10,900
11,600
Non-current liabilities
350
3,360
Current liabilities
2,400
2,700
13,650
17,650
Additional information
During the year to 30 April 2009 the company tried to stimulate
sales by reducing the selling price of its products and by offering
more generous credit terms to its customers.
Required:
Calculate each of the following ratios for the two years ended 30
April 2008 and 2009.
(a) Gross profit ratio.
(b) Return on capital employed.
(c) Current ratio.
(d) Acid test ratio.
(e) Trade receivable collection period.
(f) Inventory turnover.
and comment on your findings.
10
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