Acct3604 the council of community colleges of jamaica

ACCT3604
The Council of Community Colleges of Jamaica Page 35
A more immediate concern is the deterioration in the payment period to our company.
Breadline must be contacted immediately to find out why the account is so late in being
paid. It would not be advisable to allow any further trading on credit until the account is
within the stated credit terms. Enquiries should be made as to why our internal credit
control procedures have allowed the situation to develop this far.

ACCT3604
The Council of Community Colleges of Jamaica Page 36
Appendix
Performance ratios 20x1 20x0
Return on capital employed
(1,970+10)/
3,700+500)*100 47.1% (1,025/2500)*100 41.0%
Net assets turnover
(8,500/4,200) 2.0 times (6,500/2,500) 2.6 times
Gross profit margin (see below)
(2,550/8,500)*100 30% (1,690/6,500)*100 26%
Net profit (after tax) margin
(1,500/8,500)*100 17.6% (850/6,500)*100 13.1%
Current ratio (1,330/1,250) 1.1:1 (1,090/590) 1.8:1
Quick ratio (960/1,250) 0.77:1 (850/590) 1.4:1
Inventory holding period
(370/5,950)*365 23 days (240/4,810)*365 18 days
Accounts receivable collection period
(960/8,500)*365 41 days (600/6,500)*365 34 days
Accounts payable payment period
(See below) (Excluding Judicious)
(1,030-340)/5,950-1,200)) (590-100)/
*365 53 days (4,810-800)*365 45 days
Judicious payment period
(340/1,200)*365 103 days (100/800)*365 46 days
Gearing (500/4,200)100 12 %
The 2% loan note ha been treated as a financing item in calculating the net asset turnover.
The accounts payable payment period is based on the cost of sales as the purchases figure
is not available.