Question 5
ICAN
•
2021
•
FINANCIAL REPORTING
•
mixed
Case Stimulus
You are the Chief Accountant of Jolmarg Nigeria Limited, Pepeyoyo Limited is a competitor in the same industry as Jolmarg and has been operating for the past 20 years.
The following is the result of Pepeyoyo Limited for the last three years ended December 31.
Ratios 2016 2017 2018
Gross profit margin % 34 34.4 35.4
ROCE % 21.1 21.5 17.8
Net profit margin % 11.9 12.4 11.4
Asset turnover times 1.78 1.73 1.56
Gearing ratio % 15.6 24.3 23.6
Debt ratio % 18.5 32.0 30.9
Interest cover times 16.7 8.1 5.5
Current ratio ratio 3:1 2.8:1 2.7:1
Quick ratio ratio 1.2:1 1.1:1 1.1:1
Receivable collection period (days) 46 52 64
Inventory turnover period (days) 158 171 182
Payable payment period (days) 35 42 46
Required:
Write a report to the finance director of Jolmarg Nigeria Limited analysing:
a. Performance (profitability, liquidity and long term financial stability) of Pepeyoyo Limited based on the information available.
Requirements
(
a
)
Performance (profitability, liquidity and long term financial stability) of Pepeyoyo Limited based on the information available.
(
b
)
Identify FIVE areas which require further investigation, including references to other pieces of information which would compliment your analysis of the performance of Pepeyoyo Limited.
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About This Question
This is
Ican
2021
Financial Reporting
Question 5.
It is one of the
mixed
questions from the
2021
Ican
Financial Reporting
examination.