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Wednesday, March 17, 2021

Business Management & Business Studies Worksheet-Balance sheet and Liquidity ratios

 

Business Management/Business Studies Worksheet

Topic/s: Balance sheet and Liquidity ratios

Fresh Fruity Limited (FFL)

Balance sheet worksheet

Fresh Fruity Limited (FFL) started up a business 5 years ago producing fresh fruit drinks. FFL has developed a reputation amongst its customers for the freshness, originality, and reliability of its drinks. The brand value of FFL is extremely high in the market. Despite the economic slowdown, the company registered good sales growth. At the recent board meeting, the management has analyzed the financial position for future internal or external growth opportunities. The production manager has recommended acquiring fruit farms which will help FFL to have control over the supply of raw materials and its quality. The following key figures are taken from the books of FFL for the year ended 31 March 2020.

Machinery

$ 1500

Stock

$ 200

Buildings

$ 4000

Debtors

$ 160

Equipment

$ 300

Cash

$ 120

Creditors

$ 200

Bank overdraft

$ 40

Share capital

$ 2000

Loan capital

$ 2000

Retained profit

$ 1040

 

 

Table 1

Questions:

a)     With reference to FFL, explain the term ‘external growth’.

[ 2 marks]

b)    Explain the term ‘intangible assets.

[ 2 marks]

c)     Distinguish between fixed assets and current assets.

[ 4 marks]

d)    Using the figures given in table 1, construct a balance sheet for FFL for the year ending 31 March 2020.

 

[ 6 marks]

e)     Calculate the current ratio and quick ratio.

[ 4 marks]

f)      Comment on the liquidity position of FFL.

[ 2 marks]

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