Below are account balances, cash receipts and payments and other data for X Limited, a company that distributes chemical supplies, for the financial year that ended 30 June 2012 and 30 June 2013.
2012 2013
$ $
Accounts payable .................................................................22 000 10500
Accounts receivable ..............................................................11 000 15000
Accumulated depreciation (buildings) ....................................... 119 000 125000
Accumulated depreciation (equipment) ......................................45 000 60000
Buildings ..............................................................................412 000 450000
Cash ...................................................................................16 000 20000
Contributed capital ................................................................300 000 300000
Cost of goods sold .................................................................146 000 150000
Dividends (declared and paid) ..................................................17 000 12000
Equipment ............................................................................245 000 250000
General and administrative expenses .........................................96 000 90000
Income tax expense ...............................................................14 000 20000
Income tax payable ................................................................6 000 5000
Interest expense ....................................................................25 000 30000
Interest payable .....................................................................14 000 10000
Land .....................................................................................35 000 40000
Long-term investments .............................................................35 000 50000
Merchandise inventory ..............................................................62 000 70000
Loans, current portion ..............................................................10 000 15000
Loans, non-current ..................................................................278 000 290000
Prepaid insurance ....................................................................7 000 5000
Retained earnings, beginning balance ..........................................25 000 37000
Sales revenue ........................................................................357 000 400000
Selling expenses .....................................................................47 000 35000
Supplies ................................................................................13 000 15000
Trademarks ............................................................................13 000 15000
Wages payable .......................................................................18 000 14500
You are required to:
a) Prepare a classified statement of financial performance for 2012 and 2013
b) Prepare a classified statement of financial position for 2012 and 2013
c) From the company's financial statements, calculate the following ratios for the two years:
i) Return on Assets ratio
ii) Return on Equity ratio
iii) Net Margin
iv) Quick ratio
v) Current ratio
vi) Asset turnover ratio
vii) Average settlement period for debtors
viii) Average settlement period for creditors
d) Provide a report to management of X Limited Company giving advice based on your results from the ratios above.