Accounting Test Question No IFS: Interpretation of Financial Statements

November 7th, 2006 Comments off
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Accounting Test Question No IFS 1 : Interpretation Of Financial Statements

Accounting Test Question No IFS 1:

Details of financial performance of Company XYZ

For year 2005 Income Statement:

Net Sales – $ 7 million,

Cost of Goods sold -$ 3 million

Net Income – $1.2 million

Balance Sheet ($’000):-

Assets

2005

2004

Cash

200

240

Accounts Receivable

810

620

Inventory

830

710

Property, plant and equipment ( net)

2,590

2,420

Total Assets

4,430

3,990

 

 

 

Liabilities & Shareholders’ Equity

 

 

Current liabilities

710

640

Notes payable

550

990

Paid-in capital

1,500

1,500

Retained earnings

1,670

860

Total Liabilities & Shareholders’ Equity

4,430

3,990

The average industry for Company’s line of business are:

Inventory Turnover  5 times

Average Collection period  45 days

Asset Turnover 2 times

Required:

Evaluate Company XYZ’s asset management relative to its industry.

[  Refer Answer  ]

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