1. Which of the following ratios is likely to be most relevant for a local charity?
2. Miranda Ltd has a current ratio of 1.5, a quick ratio of 0.4 and a positive cash balance. If it purchases inventory on credit, what is the effect on these ratios?
3. The following information has been taken from Preston’s financial statements:
Preston has inventory turnover of six times.
The year‐end receivables collection period is 49 days.
Cost of sales for the year was $1,690,000 Credit purchases for the year were $2,150,000.
Preston’s cash cycle at 31 December 20X7 was 73 days
All calculations should be made to the nearest full day, and the trading year has 365 days.
What is Preston’s trade payables collection period as at 31 December 20X7?
4. Which TWO of the following explanations are unlikely to lead to an increase in receivables collection period?
5. Beta Co is a listed company with four million 50c ordinary shares in issue. The following extract is from its financial statements for the year ended 30 September 20X4.
STATEMENT OF PROFIT OR LOSS
Profit before tax 900
Income tax expense (100)
Profit for the year 800
At 30 September 20X4 the market price of Beta Co's shares was $1.50. What was the P/E ratio on that date?
6. Analysis of the financial statements of Cumberland Co at 31 December 2020 yields the following information:
Gross profit margin 42%
Current ratio 2.14
Asset turnover 4.19
Inventory turnover 11.4
What is the profit margin?
7. Write had a ROCE of 24% and an asset/turnover ratio of 4.5X.
What is Write PLC’s Net profit %?