question archive The following have been extracted from the recently published accounts of DG
The following have been extracted from the recently published accounts of DG
Subject:AccountingPrice: Bought3
The following have been extracted from the recently published accounts of DG. Extracts from the income statements to 30 April
2009 2008
Sales 11,000 9,750
Less cost of sales 8,460 6,825
Net profit before tax 465 320
This is after changing:
Depreciation 360 280
Loan note interest 80 60
Interest on bank overdraft 15 9
Audit fees 12 10
Statement of financial position as at 30 April
2009 2008
Shs, 000 Shs, 000 Sh, 000 Sh, 000
Assets
Non- current assets 1,850 1,430
Inventory 640 490
Receivables 1,230 1080
Cash 80 120
1,950
Total assets 3,800 1,690
Equity and liabilities
Equity 3,120
Ordinary share capital
800
800
Retained earnings 1,310 2110 930
Non current liabilities
Bank overdraft 110 80
Payables 750 690
Taxation 30 890 20
3,800 1730
Total equity liabilities 790
3,120
The following ratios are those calculated for DG, based on published accounts for the previous year, and also the lated industry average ratios
DG industry
30 April Average
Rose (capital employed)
Equity and debentures
16.70% 18.50%
Profits/Sales 3.90% 4.78%
Asset turnover 4.29 3.91
Current ratio 2.00 1.90
Quick ratio 1.42 1.27
Gross profit margin 30.00% 35.23%
Accounts receivable collection
Period 40 days 52 days
Accounts payable payment
Period
37 days49 days
Inventory turnover (times) 13.90 18.30
Gearing 26.37% 32.71%
Required
Calculate comparable ratios (to two decimal places where appropriated) for DG for the year ended 30 April 2009. All calculations must be clearly shown
Make a report to your board to directors analyzing the performance of DG, comparing the results against the previous year and against the industry average
