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

question 16

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.

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Definitions:

Money-Making Opportunities

Various ways or strategies through which individuals or businesses can generate income or profit.

Consumer Revolution

A period marked by an increase in the consumption and variety of goods available to the consumer, significantly changing the social and economic landscape.

Colonial Critics

Individuals or commentators who expressed opposition or criticism of colonial rule and practices, highlighting issues of exploitation and the impact on indigenous populations.

Social Structure

The organized pattern of social relationships and institutions that together constitute society.