1.6. Analysis and communication of accounting information
A subsection of Accounting, 9706, through 1. Financial accounting (AS Level)
Listing 10 of 137 questions
Wiggins has provided the following summary financial information for the year ended 30 April 2017: $ Bank overdraft 19 000 Cash in hand 1 725 Inventory at 1 May 2016 ? Inventory at 30 April 2017 152 000 Purchases 860 000 Revenue 1 042 500 Trade receivables 31 275 Additional information 40% of sales are on a cash basis. All remaining sales are on a credit basis. All purchases are on credit. The gross margin on all sales was 20%. The trade payables turnover for the year ended 30 April 2017 was 54.75 days (to two decimal places). REQUIRED State two limitations of using ratio analysis to analyse the performance of a business. Calculate the current ratio to two decimal places. Calculate the liquid (acid test) ratio to two decimal places. Calculate the rate of inventory turnover . Additional information Wiggins wishes to expand his business by taking a bank loan of $30 000 repayable over five years. REQUIRED Advise Wiggins whether or not he should take the loan. Justify your answer.
9706_s17_qp_22
THEORY
2017
Paper 2, Variant 2
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Stapleton provided the following information for the year ended 30 April 2016: $ Opening inventory 25 200 Gross profit 37 150 Additional information All goods were sold to achieve a 20% gross margin. Cash sales were $18 575. All other sales were on a credit basis. All purchases were on a credit basis. Trade receivables at 30 April 2016 were $16 500. Trade payables at 30 April 2016 were $9500. Inventory turnover was 5 times per annum. REQUIRED Calculate the trade receivables turnover . State the formula used. Formula Calculation Calculate closing inventory. Calculate the trade payables turnover . State the formula used. Formula Calculation State three uses of ratio analysis to a trader.
9706_s17_qp_23
THEORY
2017
Paper 2, Variant 3
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Anna has obtained the following data at 31 December 2016 in respect of Ravi, a possible new customer. $ Trade receivables 20 640 Cash and cash equivalents 4 840 debit Inventory 38 100 Trade payables 28 760 Other figures obtained are: Sales for the year 331 750 Inventory at 1 January 2016 46 200 Ravi has a mark-up of 25%. REQUIRED Calculate the following ratios for Ravi’s business to two decimal places: Current ratio Liquid (acid test) ratio Rate of inventory turnover Additional information Anna has also obtained the following data in respect of Yuan, another possible customer. Current ratio 3.82 : 1 Liquid (acid test) ratio 1.63 : 1 Rate of inventory turnover 6.69 times per year Anna’s main concern when choosing the customer is that they should pay her promptly. REQUIRED Advise Anna which customer she should choose. Justify your answer. State three limitations to a business of using ratio analysis.
9706_s18_qp_21
THEORY
2018
Paper 2, Variant 1
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Financial statements provide information to enable users to evaluate the financial performance of a business. State three reasons why it might be difficult to compare financial ratios between businesses in the same industry. X Limited is a wholesaler of sports goods. The directors of the company have provided the following information for the year ended 30 April 2019. $ Revenue 742 630 Cost of sales (459 991) For the year ended 30 April 2019 the rate of inventory turnover was 7.5 times. The value of inventory at 1 May 2018 was $57 682. At 30 April 2019 the trade receivables turnover was 35 days and the trade payables turnover was 32 days. All sales are made on credit. Credit purchases amounted to 80% of the value of cost of sales. REQUIRED Calculate at 30 April 2019: closing inventory trade receivables trade payables. Additional information X Limited has an operating expenses to revenue ratio of 30%. Distribution costs are twice as much as administrative expenses. Finance costs are 5% of the profit for the year. REQUIRED Prepare the income statement for X Limited for the year ended 30 April 2019. Additional information On 1 October 2018 X Limited paid a dividend of $25 000 on the basis of $0.08 per ordinary share of $1 each. On 1 February 2019 X Limited made a rights issue of 1 ordinary share for every 5 held at a premium of $0.50. This was the first time that X Limited had issued new shares. The rights issue was fully subscribed. REQUIRED Calculate the proceeds received by X Limited from the rights issue.
9706_s19_qp_22
THEORY
2019
Paper 2, Variant 2
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