Question

Boom Ltd has the following comparative data. BOOM LTD Statement of financial position as at 30...

Boom Ltd has the following comparative data.
BOOM LTD
Statement of financial position as at 30 June
2020 2019
$ $
Cash 20,050            29,380
Receivables (net) 63,560            57,190
Inventories 59,200            51,300
Property, plant and equipment (net) 207,980          179,170
350,790          317,040
Accounts payable 47,670            57,610
Loan payable (15%) 99,000            99,000
Share capital, $10 each 138,000          118,000
Retained earnings 66,120            42,430
350,790          317,040
Additional information for 2020:
1 Profit was $19,120       
2 Sales on account were $376,000.  Sales returns and allowances amounted to $29,700
3 Cost of sales was $199,400.      
4 Net cash provided by operating activities was $52,400    
5 The loan payable is a non-current liability in both years.    
6 Depreciation for the year was $22,500 and there were no disposals in the year.  
Required
Calculate the following at 30 June 2020 (round your final answers to 2 decimal places):
a) Current ratio.
b) Quick ratio.
c) Average collection period.
d) Average days in inventory.
e) Cash return on sales ratio.
f) Cash debt coverage.
g) Current cash debt coverage.
h) Capital expenditure ratio
i) Free cash flow

Homework Answers

Answer #1
(a) Current ratio 3.00 :1
(Current Assets/Current Liabilities)
[(20,050 + 63,560 + 59,200) / 47,670]
(b) Quick ratio 1.75 :1
[(Current Assets - Inventories)/Current Liabilities]
[(20,050 + 63,560) / 47,670]
(c) Average collection period 63.64 days
(365 x Average Accounts Receivable/Net Credit Sales)
(365 x 60,375/(376,000 - 29,700)
Average Accounts Receivable       60,375
(63,560 + 57,190)/2
(d) Average Days in inventory 101.13 days
(365 x Average Inventories/ cost of sales)
(365 x 55,250/199,400)
Average Inventories       55,250
(59,200 + 51,300)/2
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