Question - Financial statements of Nimbin Pty Ltd are presented below:
2016 2015
Current assets
Cash and cash equivalents $1,645 $2,110
Accounts receivables (all trades) 4,100 3,675
Inventories 7,000 6,930
______ _____
Total current assets 12,745 12,715
______ ______
Non-current assets
Property, plant and equipment 17,190 15,330
_______ ______
Total non-current assets 17,190 15,330
_______ _______
Total assets $29,935 $28,045
======= ======
Current liabilities
Payables $5,780 $5,990
_______ ______
Total current liabilities 5,780 5,990
_______ ______
Non-current liabilities
Interest-bearing liabilities 9,940 9,450
_______ _____
Total non-current liabilities 9,940 9,450
_______ _______
Total liabilities $15,720 $15,440
====== ======
Equity
Share capital $7,700 $7,700
Retained earnings 6,515 4,905
_______ _______
Total equity $14,215 $12,605
====== ======
Additional information:
Payables include $5,620 (2016) and $5,730 (2015) trade accounts payable; the remainder is accrued expenses. Market prices of issued shares at year-end (2016): Ordinary $12; Preference $6.70.
Required:
A. Calculate the following ratios for 2016. The industry average for similar businesses is shown.
B. Given the above industry averages, comment on the company's profitability, liquidity and use of financial gearing.
Question 2
a) A local restaurant is noted for its fine food, as evidenced by the large number of customers. A customer was heard to remark that the secret of the restaurant's success was its fine chef. Would you regard the chef as an asset of the business? If so, would you include the chef on the balance sheet of the business and at what value? Discuss.
b) Accounting provides much information to help managers make economic decisions in their various workplaces. You are required to provide examples of economic decisions that the following people would need to make with the use of accounting information:
- A manager of human resources
- A factory manager
- The management team of an Australian Football League (AFL) club
- The manager of a second-hand clothing charity
c) Indicate the effect of each of the following transactions on any or all of the three financial statements of a business:
1. Statement of financial position
2. Statement of financial performance
3. Statement of cash flows
Apart from indicating the financial statements (s) involved, use appropriate phrases such as ‘increase total asset', ‘decrease equity', ‘increase income', ‘decrease cash flow' to describe the transaction concerned.
1. Purchase equipment for cash.
2. Provide services to a client, with payment to be received within 40 days.
3. Pay a liability.
4. Invest additional cash into the business by the owner.
5. Collect an account receivable in cash.
6. Pay wages to employees.
7. Receive the electricity bill in the mail, to be paid within 30 days.
8. Sell a piece of equipment for cash.
9. Withdraw cash by the owner for private use.
10. Borrow money on a long-term basis from a bank.
Attachment:- Assignment.rar