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17 Problem: C7 lowing financial information was taken from the records of First security services...

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Accounting

17 Problem: C7 lowing financial information was taken from the records of First security services ind for the year 2005 Statement of Profit for the year ended December 31,2005 Sales Less: Cost of goods sold Gross profit on sales Less: Operating expenses Net profit Less: Taxes@ 30% Net Profit after taxes Liabilities Equity share Capital (1k. 100 each) Retained earnings Sundry creditors Bills payable other current liabilities Solution Current assets & Current ratio Current liabilties 5,60,000 2,80,000 Workings: Current assets <-2:1 b. Acid test ratio 1040 -1.73:1 Stock turnover Sales Stock Current liabilities-Sundry creditor + Bills payable + Other current liabilities 40 000 - 1,50,000 +90,000+40,000 = 2,80,000 Current assets-Stock Current liabilties 5,60,000-75,000 2,80,000 9,80,000 You are required to calculate: (a) Current ratio (b) Acid test ratio (c) Stock turnover ratio (d) Debtors turnover (e) Proprietary ratio (f) Operating ratio d. Debtors turnover Cash + Sundry debtors Stock Pr

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