Question

1.Long-term funds, short-term funds and shareholders’ interest are detailed on the __________ side of the __________.

2. Insanity Sports (PTY) LTD wishes to evaluate their liquidity and has provided you with the following information.

• Current assets = R500 000
• Current liabilities = R200 000
• Total Inventory value = R50 000

Using the information provided, what would the acid-test ratio results be for Insanity Sports (PTY) LTD?

3. Angie wants to determine the ability of her business to repay its debts from the sale of the assets. Which set of ratios would Angie use?

4. They generated sales revenue of R33 billion, accounting for 56.3% of the total value of production by the beverage manufacturing industry in South Africa.’ These sales revenue figures can be found on which financial statement?

Answer 1

Sol)

1) Long-term funds, short-term funds and shareholders’ interest are detailed on the liability side of the Balance sheet.

2)Current assets = R500 000

Current liabilities = R200 000

Total Inventory value = R50 000

Acid test ratio = (Current assets - Inventory ) / Current liabilities

= (500000-50000) / 200000 = 450000/200000

= 2.25

It means that Insanity Sports has Quick assets = 2.25 times of Current liabilities.

3) For assessing ability of Angie's business to repay its debts from the sale of the assets she should use the solvency ratios and to be more specific Debt Ratio should be used. Formula for debt ratio:

Debt Ratio :  

Net Assets = Non-Fictitious Assets – Current Liabilities

4) We can find revenue in the Income Statement.