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a companys current assets are less than its current liabilities company issues new shares at full market pricewhat will be the effect of this
q calculate drs quick ratiodr has the following balances under current assets and current liabilitiescurrent assetscurrent
an entitys working capital financing policy is to finance working capital using short-termfinancing to fund all the fluctuating current assets as
q conservative policy for financing working capitala conservative policy for financing working capital is one where short-term finance is usedto
q calculate ads working capital cyclead a manufacturing entity has the following balances at 30 april 2005extract from financial statements
inventory turnover is the reciprocal of inventory dayscost of salesaverage inventoryx number of timesthis shows how quickly inventory is being sold
average inventorycost of sales 365 daysaverage inventory can be arrived by taking this years and last years inventory values and dividing by 2-
q what are trade receivable daysyear-end trade receivablescredit sales or turnover 365 daysthis is average length of time taken by customers to pay
q what do you meant by trade payable daysyear-end trade payablescredit purchases or cost of salesx 365 daysthis is the length of time taken to pay
q show the quick ratio or acid testquick ratio current assets less inventoriescurrent liabilities timesthis ratio measures immediate solvency of a
current ratio ca or working capital ratioca current assetscurrent liabilities timescurrent ratio measures the short term solvency or liquidity it
q explain working capital ratiosratios are a way of comparing financial values and quantities to improve our understanding in particular they are
q show example on aggressive working capital policywith an aggressive working capital policy a company would hold minimal levels of inventories in
all the non-current assets and part of permanent assets financed by long term remaining permanent assets all temporary fluctuating assets by short
q explain moderate working capital policyall the non-current assets and permanent asset are financed by long-term finance the temporary fluctuating
q conservative policy - working capital policyall the non-current assetspermanent assets and some of the temporary current assets are financed
differences in working capital for different industries manufacturing retailserviceinventorieshigh volume of wipand finished goodsgoods for
q what is over-capitalisationover-capitalisation this is the opposite of over trading it means a company has a large volume of inventories cash
remedies for overtradingshort-term solutionsbull speeding up collection from customersbull slowing down payment to suppliersbull maintaining lower
q show the symptoms of overtradingsymptoms of overtradingbull fast sales growthbull increasing trade payablesbull increasing trade receivablesbull
q what do you meant by overtradingwhen a company is trading large volumes of sales very quickly it may also be generating large amounts of credit
working capital cycle in a manufacturing businessaverage time raw materials are in stock time taken to produce goods time taken by
dx had the following balances in its trial balance at 30 september 2006trial balance extract at 30 september 2006000
working capital cycle for a tradeinventories days time inventories areheld before being sold trade receivables days how long thecredit
q explain the working capital managementworking capital managementworking capital management is administration of current liabilities and