The following financial statements relate to Al-Husan Company, which operates a wholesale carpet business: Balance sheet as at 31 March, 2019 Assets 2018 OMR 2019 OMR Non-current assets     Land and building 381,000 427,000 Fixtures and fittings 129,000 160,000   510,000 587,000 Current assets     Inventories 300,000 406,000 Account receivables 240,000 273,000 Cash at bank 4,000 0   544,000 679,000 Total assets 1,054,000 1,266,000 Equity and liabilities     Equity     OMR 0

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1. The following financial statements relate to Al-Husan Company, which operates a wholesale carpet business:

Balance sheet as at 31 March, 2019

Assets	2018 OMR	2019 OMR
Non-current assets
Land and building	381,000	427,000
Fixtures and fittings	129,000	160,000
	510,000	587,000
Current assets
Inventories	300,000	406,000
Account receivables	240,000	273,000
Cash at bank	4,000	0
	544,000	679,000
Total assets	1,054,000	1,266,000
Equity and liabilities
Equity
OMR 0.50 ordinary shares	300,000	300,000
General reserve	263,000	234,000
	563,000	534,000
Non-current liabilities
Long-term bank loan	200,000	300,000
Current liabilities
Account payables	261,000	354,000
Bank overdraft	30,000	78,000
	291,000	432,000
Total equity and liabilities	1,054,000	1,266,000

 

 

 

Income statement for the year ended 31 March, 2019

	2018 OMR	2019 OMR
Net sales	2,240,000	2,681,000
Cost of goods sold	(1,745,000)	(2,272,000)
Gross profit	495,000	409,000
Operating expenses	(252,000)	(362,000)
Operating profit	243,000	47,000
Interest paid	(18,000)	(32,000)
Profit before taxation	225,000	15,000
Taxation	(60,000)	(4,000)
Net Profit	165,000	11,000

Notes:

1. The market value of the shares of the business at the end of the reporting period was OMR 2.50 for 2018 and OMR 1.50 for 2019.
2. All sales and purchases are made on credit.
3. The cost of goods sold figure can be analyzed as follows:

	2018 OMR	2019 OMR
Opening inventory	241,000	300,000
Purchases	1,804,000	2,378,000
	2,045,000	2,678,000
Closing inventories	(300,000)	(406,000)
Cost of goods sold	1,745,000	2,272,000

 

4. At 31 March 2017, the trade receivables stood at OMR 223,000 and the trade payables at OMR 183,000.
5. A dividend of OMR 40,000 had been paid to the shareholders in respect of each of the years.

Required:

1. Choose and calculate any four ratios that would be helpful in assessing the performance of Al-Husan Company. Use end-of-year values and calculate ratios for both 2018 and 2019.
2. Compute the number of days in the cash conversion cycle for each year.
3. Did the company manage cash more effectively in the current year? Explain.