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DUE DATE: 15TH FEBRUARY, 2016
To understand the concept of financial statements analysis with ratio analysis.
To understand the way ratio analysis is conducted and ratios are interpreted.
After attempting this assignment, the students would be able to understand:
The concept ratio analysis within the domain of financial statement analysis.
How to conduct ratio analysis and interpret the resulting figures.
Suppose, a construction firm is running a successful business in the market, however, complete information regarding its business operations and financial health is not available. Being a financial analyst, you intend to find some desired financial figures in order to be able to conduct an effective analysis of the firm’s financial health.
1. From the information given below, you need to determine the cost of goods sold of the firm using various ratios (Marks 3).
2. From the following information, you need to calculate receivable turnover ratio, days required to collect receivables and length of operating cycle (assume 365 days in a year) (Marks 4).
3. Give logical interpretation of the inventory turnover ratio of the firm, if the inventory turnover in construction industry is “9.9”. Give reasons. (Marks 3).
(Note: proper formulas; step-wise complete working is required to secure good marks)
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Opening accounts receivable
Closing accounts receivable
Net credit sales
Days required to sell inventory
Use APA style for referencing and citation. For guidance search “APA reference style” in Google and read various websites containing information for better understanding or visit http://linguistics.byu.edu/faculty/henrichsenl/apa/APA01.html
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Current Ratio = Current Assets / Current liabilities
Current Assets = Current Ratio * Current liabilities
Quick Ratio = Current Assets - Inventory / Current liabilities
Inventory = Current Assets – Quick Ratio* Current liabilities
Inventory Turnover Ratio = COGS / Inventory
COGS = Inventory Turnover Ratio * Inventory
day collection 40 ata ha
sara farooq plz upload ur solution plz jin ka galt ha wo theak kar layn
cost of goods sold = Rs. 1200000
Receivable turnover ratio = 9.09
Days required to collect receivable =40 days
length of operating cycle= 95
thank you for your sharing but i am confuse in calculation , how can we find current assets in the questions. can you please share the solution.
what is ur answer of Length of operating cycle???
Length of operating cycle = inventory sales days + receivable collection days
ara kindly tell me the solution of 3 rd part yaar baqi to olve hogea
u mean 55 + 40.15 = 95.15
mine also the same.....................
So the assignment is done n dusted then.......
How you find 40.15??
Days required to collect receivables
= 365 / RTO
Receivable Turnover ratio (RTO)
= Net credit sales / Average Receivables
= (opening + closing account receivables) / 2