The following information appeared in the annual financial statements of Hitashi Projects Limited: Statement of Comprehensive Income for the year ended 31 December 2019 R Revenue 1 250 000 Direct costs (786 000) Gross profit 464 000 Operating expenses (124 000) Operating profit 340 000 Interest expense (15 000) Profit before tax 325 000 Income tax (97 500) Profit after tax 227 500 Statement of Financial Position as at 31 December 2019 Assets R Non-current assets 314 000 Current assets 386 000 Total assets 700 000 Equity and liabilities Shareholders’ equity 350 000 Non-current liabilities 205 000 Current liabilities 145 000 Total equity and liabilities 700 000 Note Current assets (R386 000) include accounts receivable of R160 000, inventories of R80 000 and cash of R146 Inventories as at 31 December 2018 amounted to R130 Current liabilities comprise accounts payable All direct costs and revenues are on Required: Calculate the following ratios using the information provided above. Where applicable, round off answers to two decimal places. Profit margin (4) Debtor collection period (4) Creditor payment period (4) Inventory turnover (4) Return on assets (4) Acid test ratio (5)

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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Statement of Comprehensive Income for the year ended 31 December 2019

	R
Revenue	1 250 000
Direct costs	(786 000)
Gross profit	464 000
Operating expenses	(124 000)
Operating profit	340 000
Interest expense	(15 000)
Profit before tax	325 000
Income tax	(97 500)
Profit after tax	227 500

Statement of Financial Position as at 31 December 2019

Assets	R
Non-current assets	314 000
Current assets	386 000
Total assets	700 000
Equity and liabilities
Shareholders’ equity	350 000
Non-current liabilities	205 000
Current liabilities	145 000
Total equity and liabilities	700 000

Note

Current assets (R386 000) include accounts receivable of R160 000, inventories of R80 000 and cash of R146
Inventories as at 31 December 2018 amounted to R130
Current liabilities comprise accounts payable
All direct costs and revenues are on

Required:

Calculate the following ratios using the information provided above. Where applicable, round off answers to two decimal places.

Profit margin (4)

Debtor collection period (4)

Creditor payment period (4)

Inventory turnover (4)

Return on assets (4)

Acid test ratio (5)

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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