The following information is extracted from a recent year's financial records of a company which makes a single product: Sales 486,500 Production cost of sales 328,450 Purchase of raw materials 256,250 Stocks: raw materials 49,150 work-in-progress 23.400 finished goods 58,500 Trade debtors 106,640 Trade creditors 35,120 Bank overdraft 21,960 All sales and purchases were made on credit. Assume that 1 year = 365 days. %3! REQUIRED (a) Calculate for the year, the: (i) current and acid-test (quick) ratios (each rounded to 1 decimal place) (i) working capital cycle (rounded to whole days) (iii) Advise the company on what steps may be taken to reduce its working capital cycle.

The following information is extracted from a recent year's financial records of a company which makes a single product: Sales 486,500 Production cost of sales 328,450 Purchase of raw materials 256,250 Stocks: raw materials 49,150 work-in-progress 23.400 finished goods 58,500 Trade debtors 106,640 Trade creditors 35,120 Bank overdraft 21,960 All sales and purchases were made on credit. Assume that 1 year = 365 days. %3! REQUIRED (a) Calculate for the year, the: (i) current and acid-test (quick) ratios (each rounded to 1 decimal place) (i) working capital cycle (rounded to whole days) (iii) Advise the company on what steps may be taken to reduce its working capital cycle.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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