The Following Financial Statements Are for Sioux Appliances,a Sole Trader,for

Essay

The following financial statements are for Sioux Appliances,a sole trader,for the years ending 31 March 20X3,20X4 and 20X5.
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Other information:
20X2 Accounts receivable were 52,000
20X2 Inventory were 19,000
20X2 Total assets were 360,000
20X2 Sales were 490,000
The bank overdraft limit is $20,000.
The mortgage is due for repayment in 20X7.
a Give a brief explanation of what each of the following ratios measure or mean: (You are not required to interpret the results from the financial statements at this point. )
i Net profit %,Return on equity %
ii Inventory turnover (days),Accounts receivable turnover (days)
iii Liquidity ratio (= Quick ratio),Debt ratio %.
b Calculate the following ratios for the 20X5 year.Show your calculations.
i Gross profit %,Net profit %,Return on equity %
ii Inventory turnover,in times per year and in days
iii Accounts receivable turnover,in times per year and in days
iv Current ratio,Liquidity ratio,Debt ratio %.
c Comment on the ratios calculated above,and the financial statement results for Sioux Appliances during the years 20X3-20X5 inclusive,in the following areas:
• profitability
• managerial performance
• financial stability.
d Recommend to Sioux what you consider to be the 6 most important things to do to correct her financial position and performance.