Question Tag: Cash Flow Statement

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  • 30 Marks

CR – May 2016 – L3 – Q1 – Presentation of Financial Statements (IAS 1)

Explain earnings management, calculate goodwill, and prepare a consolidated statement of cash flows for Joy-land Group.

Given that accrual accounting tends to mask actual cash flow performance, stock analyst and rating agencies are generally more interest in cash flow. The directors of Joy-land Plc have called for the cash flow statement of the group so as to have a view of earnings performance devoid of accruals. The following draft group financial statements relate to Joy-land Plc.
Joy-land Plc Group: Statement of financial position as of November 30

Joy-land Group: Statement of comprehensive income for the year ended November 30, 2015.

Joy-land Group: Statement of comprehensive income for the year ended November 30, 2015.

Joy-land Group: Statement of changes in equity for the year ended November 30, 2015

The following additional information relates to the financial statements of Joy-land
(i) On December 1 2013, Joy-land acquired 8% of the ordinary shares of Talk peace. Joy-land had treated this investment as available for sale in the financial statement to November 30, 2014. On December 1, 2014. Joyland acquired a further 52% of the ordinary shares of Talk-peace and gained control of the company, the consideration for the acquisitions was as follows:

At December 1, 2014 the fair value of the 8% holding in talk peace held by Joy-land at the time of the business combination was N20 million and the fair value of the noncontrolling interest in Talk-peace was N80million. no gain or loss on the 8% holding in Talk-peace had been reported in the financial statement at December 1, 2014, the
purchase consideration at December 1, 2014 comprised cash of N60 million and share of N60million.
The fair value of identifiable net assets of Talk-peace at the date of acquisition comprised the following:

(ii) Goodwill Impairment

  • Goodwill for all subsidiaries has undergone impairment testing for the financial year ending November 30, 2015.
  • Impairment losses identified were specific to subsidiaries 100% owned by Joy-land.

(iii) Purchase of Research Project (IAS 38)

  • On December 1, 2014, Joy-land purchased a research project from a third party for ₦32 million, which was recognized as an intangible asset under IAS 38.
  • Additional costs incurred during the year include:
    • ₦8 million to complete the research phase.
    • ₦16 million for product development (capitalizable).
    • ₦4 million for initial marketing costs (not capitalizable; already accounted for correctly).
  • No other additions to intangible assets were recorded, except those from the acquisition of Talk-peace.

(iv) Rights Issue by Talk-peace

  • On November 30, 2015, Talk-peace issued new shares on a 1 for 4 basis.
  • The issue was fully subscribed and raised ₦20 million in cash.

(v) Investment Property (IAS 40)

  • Joy-land uses the fair value model to measure its investment properties.
  • During the year:
    • Part of the air-conditioning system (carrying value: ₦2 million) was replaced with a new system costing ₦4 million.
    • The replacement aligns with the treatment under IAS 40.

(vi) Sale of Surplus Land

  • Joy-land sold surplus land with a carrying value of ₦40 million for:
    • ₦60 million in cash, and
    • Plant valued at ₦16 million (part of the consideration).
  • The resulting gain on disposal has already been included in the income statement.
  • Depreciation for property, plant, and equipment (PPE) for the year totaled ₦108 million.

(vii) Defined Benefit Scheme

  • Joy-land operates a defined benefit pension scheme for select top executives and expatriates (in addition to its contributory pension scheme).
  • Current-year figures for the defined benefit scheme:
    Description ₦’m
    Opening Balance (Dec 1, 2014) 88
    Current Year Charge to P&L 16
    Contributions Paid (28)
    Actuarial Loss to OCI 24
    Closing Balance (Nov 30, 2015) 100

(viii) The associate company did not pay any dividends in the year.
(ix) Deferred tax of N40illion arose on the gains on available for sale investments in the year

Required
(a) As the CFO of the group, briefly explain to the legal and engineer directors what is meant by earnings management giving TWO examples of how accruals could   be employed in the earning management. (3 marks)
N’m
Balance at the beginning, December 1, 2014 88
Charge to profit or loss for the year 16
Pension contributions paid during the year (28)
Actuarial loss to other comprehensive income 24
Balance at the end, November 30 2015 100
(b) Determine the goodwill arising on the acquisition of the subsidiary on December 1, 2014 and total goodwill impairments of the group as at November 30, 2015 statement of cash flow on the assumption that it is the policy of Joyland Plc to value Non-controlling interest at full fair value. (3 marks)
(c) Prepare a consolidated statement of cash flows for the Joy-land Group for the year ended November 30, 2015 using the indirect method under IAS 7 ‘statement of Cash flow.
Note; Ignore deferred taxation other than where is mention in the question.

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  • 7 Marks

AT – Nov 2014 – L3 – SB – Q2b – Corporate Tax Compliance and Reporting

Explain why tax charges differ from applicable rates and why tax payments differ between cash flows and profit statements.

Mr. Ojoowuro, the director of a grocery store, has noticed that the tax charge for his company is N15 million on profits before tax of N105 million, resulting in an effective tax rate of 14.3%. Another company, Irin Plc, has an income tax charge of N30 million on a profit before tax of N90 million, resulting in an effective rate of 33.3%, yet both companies state that the rate of income tax applicable to them is 25%. Mr. Ojoowuro has also noticed that in the statements of cash flows, both companies have paid the same amount of tax of N24 million.

Required:
Advise Mr. Ojoowuro on the possible reasons why the income tax charge in the financial statements as a percentage of the profit before tax may not be the same as the applicable income tax rate and why the tax paid in the statement of cash flows may not be the same as the tax charge in the statement of profit or loss and other comprehensive income.

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  • 30 Marks

FM – Nov 2017 – L3 – Q1 – Financial Planning and Forecasting

Prepare forecast financials for Lekki Plc and suggest divestment options for a poorly performing subsidiary.

Despite the global recession, demand for the company’s products has recently increased and is expected to grow over the next two years.

As part of a recent strategic review, the directors made the following projections for the years ending March 31, 2018, and March 31, 2019:

  1. An anticipated annual revenue increase of 8% for each year.
  2. Operating costs (excluding depreciation) expected to rise by 4% per year.
  3. Tax rate to remain at 21%, payable in the year liability arises.
  4. The trade receivables/revenue and trade payables/operating costs ratios will stay the same.
  5. Inventory levels to increase by 10% in the year ending March 31, 2018, and then remain stable.
  6. Non-current assets, including Lekki Plc.’s headquarters and factory, are not depreciated, and capital allowances are negligible.
  7. Dividend growth rate to remain at 6% annually, with dividends declared at the year-end and paid the following year.
  8. Purchase of new machinery at N8 million, financed through existing overdraft facilities. Machinery to be depreciated straight-line over 8 years with a N1 million residual value; capital allowances will apply at 18% reducing balance.
  9. Finance costs are projected to increase by 50% in the year ending March 31, 2018, and remain stable thereafter.

Financial Statement Extracts (March 31, 2017):

  • Income Statement:
    • Revenue: N60,240,000
    • Operating Costs: N49,500,000
    • Operating Profit: N10,740,000
    • Finance Costs: N800,000
    • Profit before Tax: N9,940,000
    • Tax: N2,286,000
    • Profit after Tax: N7,654,000
  • Statement of Financial Position:
    • Assets:
      • Non-current Assets: N28,850,000
      • Current Assets:
        • Inventories: N9,020,000
        • Trade Receivables: N9,036,000
        • Cash and Equivalents: N396,000
    • Equity and Liabilities:
      • Ordinary Share Capital: N16,700,000
      • Retained Earnings: N12,482,000
      • Non-current Liabilities: N8,000,000 (6% Debentures)
      • Current Liabilities: N10,120,000 (Trade Payables, Dividends)

Assume today is April 1, 2017.

a. Prepare a Forecast Financial Statement (Income Statement, Statement of Financial Position, and Cash Flow Statement) for each of the years ending March 31, 2018, and March 31, 2019.
(24 Marks)

Note: All calculations should be rounded up to the nearest N’000.

b. Beyond March 31, 2019, the directors are considering the disposal of a smaller subsidiary due to poor performance. The Finance Director suggests avoiding liquidation to minimize industrial relations issues.

Required: Discuss three non-liquidation methods to divest the subsidiary.
(6 Marks)

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  • 20 Marks

FR – May 2015 – L2 – SB – Q3 – Statement of Cash Flows (IAS 7)

Calculate and analyze financial ratios and prepare cash flows from operating activities for Galadanci Plc.

(a) Galadanci Plc, a telecommunications company, has the following financial statements for the years ending 31 December 2013 and 2014. Using the statements below, calculate specific ratios and analyze Galadanci Plc’s performance:

Statements of Profit or Loss and Other Comprehensive Income for the year ended

2014 (N’billion) 2013 (N’billion)
Revenue 2,430 1,638
Cost of Sales (1,701) (983)
Gross Profit 729 655
Administrative Costs (311) (180)
Distribution Costs (207) (117)
Finance Costs (36) (6)
Profit before Taxation 175 352
Income Tax Expense (54) (102)
Profit for the Year 121 250

Statements of Financial Position as at 31 December

Additional Information for 2014

  1. Galadanci Plc acquired 60% of Papanga Plc’s shares to diversify into agriculture.
  2. The company increased its mobile subscriber base, raising the average revenue per user.
  3. No dividends were received from Papanga Plc, and the share value remained constant.

Required:

  1. Calculate the following ratios for the year ended 31 December 2014, analyze Galadanci Plc’s performance, and comment on qualitative factors impacting the company:
    • Gross Profit Percentage
    • Return on Capital Employed (where capital employed = Total Assets – Current Liabilities)
    • Net Profit (PBIT) Percentage
    • Asset Turnover
    • Gearing Ratio
    • Debt/Equity Ratio (16 Marks)
  2. Prepare Galadanci Plc’s Cash Flows from Operating Activities using the indirect method according to IAS 7. (4 Marks)

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  • 20 Marks

FR – NOV 2016 – L2 – Q4 – Statement of Cash Flows (IAS 7)

Preparation of statement of cash flows using indirect method and explanation of benefits of published cash flow statements to users.

The summarised Financial Statements for the year ended March 31, 2016 of Perfect World Plc are as follows:

STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED MARCH 31, 2016

N’m
Revenue 19,350
Cost of Sales (9,000)
Gross Profit 10,350
Operating Expenses (4,500)
Finance Costs (1,125)
Profit Before Tax 4,725
Income Tax Expense (2,025)
Profit for the year 2,700

STATEMENT OF FINANCIAL POSITION AS AT MARCH 31

2016 2015
N’m N’m
Non-Current Assets:
Property, Plant & Equipment 18,900 16,650
Current Assets
Inventories 6,750 7,200
Trade Receivables 9,900 8,100
16,650 15,300
Total Assets 35,550 31,950
Equity
Share Capital 5,400 5,400
Retained Earnings 9,900 8,550
15,300 13,950
Non-Current Liabilities
Deferred Tax 4,815 3,825
Financial Lease Liabilities 5,850 5,400
10,665 9,225
Current Liabilities
Trade Payables 5,625 4,905
Current Tax 1,013 923
Finance Lease Obligation 2,250 2,025
Bank Overdraft 697 922
9,585 8,775
Total Equity & Liabilities 35,550 31,950

Additional Information include:

(i) Dividend paid during the year amounted to N1,350million.

(ii) Perfect World Plc finances a number (but not all) of its property plant and equipment purchased using finance lease. During the period, property, plant and equipment which would have cost N2,700million to purchase outright was acquired under finance lease.

(iii) There was no accrual of interest at the beginning or at the end of the year.

(iv) Depreciation charged for the year totalled N4,365million. There were no disposals of property, plant and equipment during the year.

Required:

a. Prepare the statement of cashflows of Perfect World Plc for the year ended March 31, 2016 using indirect method. (14 Marks)

b. Draft a Memo to the Director of Perfect World Plc summarising the major benefits that users receive from a published statement of cashflows. (6 Marks)

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  • 2 Marks

FR – May 2019 – L2 – Q2c – Statement of Cash Flows (IAS 7)

Discuss the advantages of the direct method of preparing a statement of cash flows over the indirect method.

Discuss the advantages of the direct method of preparing a statement of cash flows over the indirect method.

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  • 11 Marks

FA – Nov 2014 – L1 – SB – Q6b – Financial Statements (Preparation of Statement of Profit or Loss, Statement of Financial Position, Cash Flow Statement, and Statement of Changes in Equity)

Preparing the statement of cash flows (indirect method) showing cash generated from operating activities.

The financial data extracted from the books of Solomon Enterprises Limited for the year ended 31 December 2013 are as follows:

Particulars N’000
Sales 55,924
Cost of sales 41,028
Selling and distribution expenses 2,748
Administration expenses 2,404
Interest expenses 1,528
Tax paid 1,584
Increase in inventories 11,868
Decrease in receivables 1,416
Increase in payables 4,944

Additional information:
Included in administration expenses are:
i. Depreciation charges for the year of N500,000
ii. Loss on disposal of assets of N48,000

Required:
Prepare the Statement of Cash Flows showing cash flow generated from operating activities using the indirect method. (11 Marks)
Show all workings.

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  • 1 Marks

BL – Nov 2019 – L1 – SA – Q5 – Law of Trusts

Cash Flow Statement, Financial Position, Solvency Question Short Summary: Identifying the information not revealed by a statement of cash flow

Question:
Which of the following information CANNOT be revealed by a statement of cash flow?
A. The entity’s short-term solvency
B. Operating cash position
C. Financial position of the entity
D. Liquidity position of the entity
E. Investing activities of the entity

 

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  • 20 Marks

FA – May 2023 – L1 – SB – Q2 – Financial Statements Preparation

Preparation of a statement of cash flows for Samu PLC using the indirect method.

Samu PLC is a listed company. The following financial statements of the company are available:

Statement of Profit or Loss for the Year Ended December 31, 2018:

N’m
Revenue 6,740
Cost of Sales (4,840)
Gross Profit 1,900
Income from Investment Property 60
Distribution Costs (120)
Administrative Expenses (350)
Finance Costs (50)
Profit Before Tax 1,440
Income Tax Expense (160)
Profit After Tax for the Year 1,280

Statement of Financial Position as at December 31:

2018 (N’m) 2017 (N’m)
Non-Current Assets:
Plant and Equipment 2,880 1,860
Investment Property 420 400
Current Assets:
Inventory 1,210 810
Trade Receivables 480 590
Bank 1,010 –
Total Assets 6,000 3,660
Equity:
Equity Share Capital of N0.50 each 2,000 600
Share Premium 750 50
Retained Earnings 1,440 1,310
Non-Current Liabilities:
8% Loan Notes 250 430
Current Liabilities:
Trade Payables 1,410 1,050
Bank Overdraft – 120
Income Tax Payable 150 100
Total Liabilities and Equity 6,000 3,660

Additional Information:

  1. An item of plant with a carrying amount of N240 million was sold at a loss of N90 million during the year. Depreciation of N280 million was charged on property, plant, and equipment in the year ended December 31, 2018. There were no sales of investment property during the year.
  2. Part of the 8% loan notes was redeemed during the year.
  3. There was an issue of shares for cash on June 1, 2018.
  4. Dividend was paid on September 1, 2018.

Required:

Prepare a statement of cash flows for Samu PLC for the year ended December 31, 2018, in accordance with IAS 7 Statement of Cash Flows, using the indirect method. (Total 20 Marks)

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  • 20 Marks

FR – Nov 2015 – L2 – Q3 – Preparation of Financial Statements, Financial Statement Analysis

This question requires preparing a cash flow statement for CL Ltd using IAS 7 and calculating the gross profit margin based on changes in purchase and selling prices.

(a) CL Ltd is a wholesaler and retailer of office furniture. Extracts from the company’s financial statements are set out below:

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED:

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2015:

Description Stated Capital Capital Surplus Income Surplus Total
Balances b/f 8,500 2,500 15,800 26,800
Share issue 12,900 – – 12,900
Comprehensive income – 5,000 7,000 12,000
Dividends paid – – (4,000) (4,000)
Balances c/f 21,400 7,500 18,800 47,700

STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH:

Note:
Non-current assets
During the year, the company redesigned its display areas in all of its outlets. The previous displays had cost GHS10 million and had been written down by GHS9 million. There was an unexpected cost of GHS500,000 for the removal and disposal of the old display areas. Also, during the year, the company revalued the carrying amount of its property upwards by GHS5 million, and the accumulated depreciation on these properties of GHS2 million was reset to zero.
All depreciation is charged to operating expenses.

Required:
Prepare a statement of cash flows for CL Ltd for the year ended 31 March 2015 in accordance with IAS 7 – Statement of Cash Flows. (15 marks)

(b) The directors of CL Ltd are concerned at the deterioration in its bank balance and are surprised that the amount of gross profit has not increased for the year ended 31 March 2015. At the beginning of the current accounting period (i.e. on 1 April 2014), the company changed to importing its purchases from a foreign supplier because the trade prices quoted by the new supplier were consistently 10% below those of its previous supplier. However, the new supplier offered a shorter period of credit than the previous supplier (all purchases are on credit). In order to encourage higher sales, CL Ltd increased its credit period to its customers, and some of the cost savings (on trade purchases) were passed on to customers by reducing selling prices on both cash and credit sales by 5% across all products.

Required:
(i) Calculate the gross profit margin that you would have expected CL Ltd to achieve for the year ended 31 March 2015 based on the selling and purchase price changes described by the directors. (2 marks)

(ii) Comment on the directors’ surprise at the unchanged gross profit and suggest what other factors may have affected gross profit for the year ended 31 March 2015.

(3 marks)
(Total: 20 marks)

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  • 20 Marks

PSAF – Nov 2023 – L2 – Q2 – Preparation and presentation of financial statements for local government

Prepare a Cash Flow Statement for a Municipal Assembly and explain benefits of cash flow information.

a) Below are items of transactions obtained from the financial records of Ganigani Municipal Assembly for the year ended 31 December 2022.

Transaction Items GH¢’000
Share of District Assembly Common Fund received 68,000
Share of District Assembly Common Fund in arrears 120,000
District Development Facility 60,000
Clean Ghana grant (i) 40,000
Hawkers licenses 5,000
Dog licenses 2,000
Hotel and Restaurant licenses 43,000
Akpeteshie Distillers or sellers’ licenses 9,000
Non-established post salaries (Paid from Consolidated Fund) 87,000
Casual labour 77,000
Pensions contribution 8,000
Assembly members sitting allowances 7,000
Salary related allowances (ii) 20,000
Training, Seminar and Conferences (iii) 45,000
Travel and transport 12,000
Utility expenses (iv) 1,000
Consumables 200
Interest expense (v) 500
Consumption of fixed asset (Accumulated) 44,000
Consumption of fixed asset (charged for the year) 4,800
Purchase of motor vehicle (vi) 30,000
Premises (old premises revalued by experts) 167,000
Cash proceeds from auction of old furniture 300
Recoveries from loan and advances 1,200
Loans and advances granted during the year 5,000
Issue of Municipal Bonds 100,000
Redemption of Municipal Bonds 28,000
Bank loan borrowed during the year 12,000
Loan repayment 3,400
Investment income received 100
Property rates 65,000
Basic rate 21,000
Market tolls and fees 12,400
Fees and miscellaneous charges 11,400
Cash and cash equivalent at 31 December 2022 (Debit) 70,000
Accumulated Fund Balance (Debit) 123,500
Donation of Cement from Concerned Citizens 3,500

Additional Information:

i) Clean Ghana grant of GH¢40,000 has a component of 40% in kind. ii) The Assembly paid 40% of the GH¢20,000 salary related allowances. iii) 60% of the GH¢45,000 representing Training, Seminar and Conferences expenses was funded by donors. iv) 25% of the GH¢1,000 representing utility expenses was in arrears. v) 90% of the GH¢500 representing interest expense has been paid. vi) 80% of the GH¢30,000 representing Motor Vehicle has been paid.

Required:

a) Prepare a Cash Flow Statement for the year ended 31 December, 2022 for Ganigani Municipal Assembly in compliance with the International Public Sector Accounting Standards 2: Cash Flow Statement and the current Chart of Accounts of Government of Ghana. (16 marks)

b) Explain FOUR (4) benefits of Cash Flow Information to the users of the financial statements of Ganigani Municipal Assembly. (4 marks)

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  • 20 Marks

FA – Aug 2022 – L1 – Q4 – IAS 7: Statement of cash flows | Interpretation of financial statements (Financial Ratios)

Preparation of a Statement of Cash Flows using IAS 7, including cash flows from operating, investing, and financing activities, with an analysis of the benefits of preparing cash flow statements.

a) The following information relates to the activities of Chemu Ltd:

Statement of Financial Position as at 31 December

Account 2021 (GHȼ’000) 2020 (GHȼ’000)
Assets
Non-current assets 1,295 810
Current assets
Inventory 1,500 500
Receivables 2,680 890
Bank – 740
Total assets 5,475 2,940
Equity and liabilities
Equity
Share capital 600 400
Retained earnings 1,625 600
Total equity 2,225 1,000
Non-current liabilities
10% Debentures 160 360
Current liabilities
Bank overdraft 1,810 –
Payables 1,000 680
Taxation 280 900
Total liabilities 3,250 1,940
Total equity and liabilities 5,475 2,940

Additional information:

i) The Statement of Profit or Loss for the year ended 31 December 2021 shows the following:

Account Amount (GHȼ’000)
Operating profit 1,531
Interest payable (26)
Profit before taxation 1,505
Taxation (480)
Profit for the period 1,025

ii) Payables consist of trade payables and accrued interest. The accrued interest as at 31 December 2021 was GHȼ45,000 and as at 2020 was GHȼ80,000.

iii) Profit before taxation had been arrived at after charging GHȼ395,000 for depreciation on non-current assets.

iv) During the year, non-current assets with a carrying amount of GHȼ200,000 were sold for GHȼ190,000.

Required:
Prepare a Statement of Cash Flows for Chemu Ltd for the year ended 31 December 2021, in accordance with IAS 7: Statement of Cash Flows.
(16 marks)

b) Identify FOUR (4) benefits Chemu Ltd may derive from preparing a Statement of Cash Flows.
(4 marks)

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  • 20 Marks

FA – Nov 2018 – L1 – Q2 – IAS 7: Statement of cash flows

Prepare a statement of cash flows using the indirect method and differentiate between the direct and indirect methods.

a) Mensah & Co. Ltd
Statement of Financial Position as at 31 December 2017

Required:
a) Prepare a statement of cash flow as at 31 December 2017 for Mensah & Co. Ltd using the indirect method. (17 marks)

b) Differentiate between the Direct and Indirect Method of reporting cash flow from operating activities. (3 marks)

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  • 20 Marks

FA – May 2016 – L1 – Q4 -Preparation of financial statements of a sole trader | IAS 7: Statement of cash flows

Prepare an adjusted cash book, a bank reconciliation statement, and discuss the benefits of reconciling cash book and bank statement balances.

The Statements of Financial Position for the last two years for AO Ltd are shown below. AO Ltd implemented an expansion programme during the year ended 31st May 2015.

Additional information:
i) The total depreciation provision incorporated in the statements of financial position was GH¢48,000 at 31st May 2014 and GH¢122,000 at 31st May 2015.
ii) During the year ended 31st May 2015, a non-current asset costing GH¢22,000 with a carrying amount of GH¢6,000 was sold for GH¢1,000. No other disposals took place.
iii) The revaluation surplus represents a revaluation of premises during the year ended 31st May 2015.

Required:
a) Prepare a Statement of Cash Flows for AO Ltd for the year ended 31st May 2015 in accordance with IAS 7. (Use the indirect method). (12 marks)
b) State the effects of the expansion policy on AO Ltd. (8 marks)

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  • 20 Marks

FA – Nov 2015 – L1 – Q3 -Interpretation of financial statements (Financial Ratios) | IAS 7: Statement of cash flows

Define key terms related to cash flow and calculate liquidity ratios using given financial data.

(a) Explain what is meant by the following terms as per IAS 7:
i. Statement of Cash flow (3 marks)
ii. Cash (1 mark)
iii. Cash equivalents (1½ marks)
iv. Operating activities (1½ marks)
v. Investing activities (1½ marks)
vi. Financing activities (1½ marks)

(b)
(i) Yaa Baby Company Ltd. has the following items in its Statement of Financial Position as at 31st December, 2014:

Item GH¢
Inventories 130,000
Trade Receivables 60,500
Cash in hand 3,453
Trade Payables 96,750

The company belongs to a Trade Association that has recently published industry averages for key financial ratios based upon a survey of its members. The industry averages for current and quick ratios applicable to the business of Yaa Baby Co. Ltd are:

  • Current ratio = 1.55: 1
  • Quick ratio = 0.95: 1

Required:
Calculate Current and Quick ratios of Yaa Baby Co. Ltd. and briefly comment on the result with reference to the industry averages. (5 marks)

(ii) Financial Ratios can be grouped under three (3) broad categories i.e. Profitability, Liquidity/Working capital, and Debt and Gearing/Leverage ratios. List all the ratios under Liquidity or Working capital ratios. (5 marks)

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