Mr A. Makebe owns a sugarcane farm in the Mpumalanga sugar belt. As his financialadvisor, it is your job to monitor changes in the financial structure of his operations overtime.He presents you with his Balance Sheets for the 201X and 201Y seasons. In addition, heinforms you that Net Farm Income for 201X was R256 000 while interest charges onloans totaled R150 000. Corresponding figures for 201Y were R1 060 000 and R238 000,respectively.Use ratio analysis to compute the following financial ratios from the data that he hasprovided:A. Solvency measures:i. Net capital ratioii. Leverage ('gearing") ratio.iii. Own capital ratioB. Liquidity measures:i. Current ratioii. Acid test ratio (assume livestock and supplies cannot be converted to cashimmediately)iii. Intermediate (medium-term) ratio

Solvency Measures:Net Capital Ratio (Equity Ratio): This ratio indicates the proportion of a…

Answered: Mr A. Makebe owns a sugarcane farm in…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

See similar textbooks

Similar questions

John is a finance director of Nadim Product PLC, a company which manufactures and sells bathroom product such as baths, sinks and toilet. These product are sold through a selection of specialist shops and through larger store, customers include professional plumbers and also ordinary householder who are renovating their houses themselves. The company operates at the lower end of the market and does not have a strong reputation for service. Sales have been slowly declining whereas those of competitors have been improving. In order to encourage increased sales the board of directors has decided to pay senior staff a bonus if certain target is achieved. The two main targets are based on profit levels and annual sales. Two months before the end of the financial year the finance director asks one of his staff to check through the order and account to assess the current situation. He informed that without a sudden improvement in sales before the year end the important sales target will not…
GIANTS, a sole trader extracted the following trial balance from her books at the close of business on 31st December, 2016: Dr Cr GHȻ GHȻ Purchases and sales 61,420 127,245 Inventory 1 January, 2016 7,940 Capital 1 January, 2016 25,200 Bank overdraft 2,490 Cash 140 Discounts 2,480 62 Returns 3,486 1,356 Carriage outwards 3,210 Rent and insurance 8,870 Allowance for doubtful debts 630 Fixtures and fittings 1,900 Van 5,600 Accounts receivable and trade payable 12,418 11,400 Drawings 21,400 Wages and salaries 39,200 General office expenses 319 168,383 168,383 Additional information: (a) Inventory 31st December, 2016 GHȻ 6,805 (b) Wages and salaries accrued at 31st December, 2016 GHȻ 3,500; Office expenses GHȻ 16 (c) Rent prepaid 31st December, 2016 GHȻ 600 (d) Increase in allowance for doubtful debts by GHȻ 110 to GHȻ 740 (e) Provide for depreciation as follows: Fixtures and fittings GHȻ 190 and Van GHȻ 1,400 5 Required: a) Prepare the income statement…
Retailer Budget D. Tomlinson Retail seeks your assistance in developing cash and other budgetinformation for May, June, and July. The store expects to have the following balances at the end ofApril:Cash $ 5,500Accounts receivable 437,000Inventories 309,400Accounts payable 133,055The firm follows these guidelines in preparing its budgets:∙ Sales. All sales are on credit with terms of 3/10, n/30. Tomlinson bills customers on the last day ofeach month. The firm books receivables at gross amounts and collects 60% of the billings withinthe discount period, 25% by the end of the month, and 9% by the end of the second month. Thefirm’s experience suggests that 6% is likely to be uncollectible and is written off at the end of thethird month.∙ Purchases and expenses. All purchases and expenses are on open account. The firm pays its payables over a 2-month period with 54% paid in the month of purchase. Each month’s units of endinginventory should equal 130% of the next month’s cost of sales. The…
A shopping center in Miami, Florida was purchased for $16 million and was expected to produce a first year annual NOI of $960,000. Financing was obtained at a 60% LTV ratio with a 4.5% annual interest rate payable monthly and fully amortizing over 25 years. What is the expected first year before tax cash return on invested equity? a. 8.25% b. 6.0% c. 4.5% d. 5.0%
What is the APR on a $700,000 fixed rate mortgage loan fully amortizing over 30 years if the stated annual interest rate is 5.5% and the lender charges 1.5% as an origination fee, $750 for an appraisal and $18 for a credit report? a.5.65% b.5.72% c.5.36% d. 5.5%
Kamal Fate production manager of Kennesaw Manufacturing, finds his profit at $26,400 (as shown in the statement below) inadequate for expanding his business. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment Kamal would like to improve profit line to $36,400 so he can obtain the bank's approval for the loan Sales Cost of supply chan purchases Other production costs 240,000 163,200 Faxed costs Prof % of sales 100% 68% 10% 11% 11% 24,000 26,400 26,400 a) What percentage improvement is needed in a supply chain strategy for profit to improve to $36 400? What is the cost of material with a $36,400 profit? A decrease of in supply chain costs is required to yield a prott of $36,400, for a new cost of supply chain purchases of $ (Enter your response for the percentage decrease to one decimal place and enter your response for the new supply chain cost as a whole number) O
Following a tendering process your firm has recently been appointed external auditor of Dazzle Ltd (Dazzle) for the year ending 31 July 20X1. The audit engagement letter is still to be signed. The previous auditor did not seek reappointment. Your firm has also been invited to provide tax planning and compliance work for the company. All of the shares of Dazzle are owned by two sisters: Ruby and Amber Dazzle. They are the only directors and spend on average three days a week managing Dazzle as they have other business interests. The company employs a full-time qualified accountant but does not have a Finance Director. Dazzle manufactures and sells high quality mirrors and light fittings, which are produced in the company’s workshop, in the North East of England. At peak times the company uses subcontractors to help with the manufacture of light fittings as they lack sufficient staff in this area. Due to changes in working practices as a result of covid-19 fewer people are permitted in…
K Kamal Fatehl production manager of Kennesaw Manufacturing, finds his profit at $30,800 (as shown in the statement below) inadequate for expanding his business. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Kamal would like to improve profit line to $40,800 so he can obtain the bank's approval for the loan. Sales Cost of supply chain purchases Other production costs Fixed costs Profit 280,000 182,000 39,200 28,000 30,800 % of sales 100% 65% 14% 10% 11% a) What percentage improvement is needed in a supply chain strategy for profit to improve to $40,800? What is the cost of material with a $40,800 profit? A decrease of 5.5% in supply-chain costs is required to yield a profit of $40,800, for a new cost of supply chain purchases of $172,000. (Enter your response for the percentage decrease to one decimal place and enter your response for the new supply chain cost as a whole number.) b) What percentage improvement is needed in a…
Webber Limited plans to maintain cash balance of $8000. The variance of its daily cash flow to date is $4,000,000. The cost to buy or sell the firm’s security is approximately $50. The daily interest is 0.025%. Calculate: The lower limit The spread The upper limit The return point
On December 31, 2019, the unadjusted trial balance of Tarzwell Services showed the following balances: Accounts receivable Allowance for doubtful accounts Sales $200,000 1,000 Cr. 700,000 The business has given up trying to collect $5,000 of its accounts receivable but has not yet recorded the write-off entry. The firm uses the allowance method to estimate bad-debt expense. Required a) Provide the entry for the write-off. b) If the firm uses the percent-of-sales allowance method for recording bad-debt expense, and has experienced an average 6% rate of non-collection based on sales, provide the entry to record bad-debt expense for 2019. c) Assume that after the firm recorded the $5,000 of write-offs, it determined that 18% of its remaining accounts receivable will be uncollectible under the aging method. Provide the entry to record bad-debt expense. Don't give answer in image format
Adjusted Bank Balance. Mary's last bank statement showed an ending balance of $208.32. This month, she deposited $787.01 in her account and withdrew a total of $271.89. Furthermore, Mary wrote a total of five checks, two of which have cleared. The two checks that have cleared total $182.73. The three remaining checks total $122.15. Mary pays no fees at her bank. What is the balance shown this month on Mary's bank statement? What is the adjusted bank balance? The balance shown this month on Mary's bank statement is CLUD (Round to the nearest cent.)
Assignment 1 The following is the trial balance of Akwaaba Limited, a trading company, as at 31st December, 2016: Debit GH¢’000 Credit GH¢’000 500,000 Ordinary shares 14,500 8% Loan notes (2012 – 2017) 2,500 10% Preference shares (redeemable) 3,000 Revaluation surplus 800 General reserve 1,500 Retained earnings – 1/1/2016 3,600 Administration expenses 8,540 Selling & distribution expenses 5,600 Sales 68,865 Inventory - 31/12/2016 3,150 Cost of sales 35,500 Loan Note interest paid 195 Investment income 360 Leasehold building at valuation-1/1/2016 14,000 Plant and equipment– cost/depreciation 13,750 3,200 Computer equipment– cost/depreciation 7,200 2,000 Motor vehicles – cost/depreciation 1,500 400 Investment property 8,700 Trade receivables 9,200 Bank 910 Trade payables…

SEE MORE QUESTIONS

Recommended textbooks for you

Understanding Business

Management

ISBN:

9781259929434

Author:

William Nickels

Publisher:

McGraw-Hill Education

Management (14th Edition)

Management

ISBN:

9780134527604

Author:

Stephen P. Robbins, Mary A. Coulter

Publisher:

PEARSON

Spreadsheet Modeling & Decision Analysis: A Pract…

Management

ISBN:

9781305947412

Author:

Cliff Ragsdale

Publisher:

Cengage Learning

Understanding Business

Management

ISBN:

9781259929434

Author:

William Nickels

Publisher:

McGraw-Hill Education

Management (14th Edition)

Management

ISBN:

9780134527604

Author:

Stephen P. Robbins, Mary A. Coulter

Publisher:

PEARSON

Spreadsheet Modeling & Decision Analysis: A Pract…

Management

ISBN:

9781305947412

Author:

Cliff Ragsdale

Publisher:

Cengage Learning

Management Information Systems: Managing The Digi…

Management

ISBN:

9780135191798

Author:

Kenneth C. Laudon, Jane P. Laudon

Publisher:

PEARSON

Business Essentials (12th Edition) (What's New in…

Management

ISBN:

9780134728391

Author:

Ronald J. Ebert, Ricky W. Griffin

Publisher:

PEARSON

Fundamentals of Management (10th Edition)

Management

ISBN:

9780134237473

Author:

Stephen P. Robbins, Mary A. Coulter, David A. De Cenzo

Publisher:

PEARSON

SEE MORE TEXTBOOKS