1.6. Analysis and communication of accounting information
A subsection of Accounting, 9706, through 1. Financial accounting (AS Level)
Listing 10 of 137 questions
Ayesha has provided the following extracts from her business’s financial statements. Extract from the Income Statement for the year ended 31 December 2019 $ $ Revenue 145 500 Opening inventory 11 440 Purchases 120 120 131 560 Closing inventory 14 560 Cost of sales 117 000 Gross profit 28 500 Extract from the Statement of Financial Position at 31 December 2019 $ Current assets Inventory 14 560 Trade receivables 9 300 Cash and cash equivalents 4 240 28 100 Current liabilities Bank overdraft 8 000 Trade payables 10 400 18 400 All purchases are on credit. Two-thirds of all sales are on a credit basis. REQUIRED Calculate the following ratios. State the formula used. Trade payables turnover (in days) Formula Calculation Trade receivables turnover (in days) Formula Calculation Current ratio (to two decimal places) Formula Calculation Additional information Ayesha is concerned about her business’s liquidity. She has provided the following ratios based on the year ended 31 December 2018. Trade payables turnover 34 days Trade receivables turnover 32 days Current ratio 1.90 : 1 Analyse the trend in Ayesha’s business’s liquidity. State two factors that should be considered when choosing businesses with which to compare a business.
9706_s20_qp_21
THEORY
2020
Paper 2, Variant 1
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N Limited is a trading company. The statement of financial position at 31 December 2021 is as follows. $000 Assets Non-current assets at net book value Current assets Inventory Trade receivables Total assets Equity and liabilities Equity Share capital Share premium Retained earnings Total equity Liabilities Non-current liabilities 8% Debentures (2026) Current liabilities Trade payables Bank overdraft Total liabilities Total equity and liabilities The following information is also available. Purchases for the year were $600 000 of which 80% were on credit. Credit sales were 30% of all sales. The company had a gross profit margin of 40%. The company’s gross profit for the year ended 31 December 2021 was $420 000. The company’s profit for the year was $182 000. No interest was charged on the bank overdraft. REQUIRED Calculate the following ratios for the year ended 31 December 2021 stating the formula used. Trade payables turnover Formula Calculation Trade receivables turnover Formula Calculation Return on capital employed (to two decimal places) Formula Calculation Non-current asset turnover (to two decimal places) Formula Calculation Explain the importance of this non-current asset turnover to the directors of N Limited. Explain one reason why shareholders will be interested in the financial statements of a company.
9706_s22_qp_22
THEORY
2022
Paper 2, Variant 2
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Questions Discovered
137