In: Accounting
The following trial balance relates to Rapcap plc at 31 December 2019:
£000 |
£000 |
|
Land and Building – at cost 1/1/ 2019 |
350,000 |
|
Accumulated depreciation of building at 1/1/ 2019 |
50,000 |
|
Plant at cost |
108,600 |
|
Accumulated depreciation of plant at 1/1/ 2019 |
24,600 |
|
Investment property – at valuation 1/1/2019 |
30,000 |
|
Investment income |
1,200 |
|
Purchases |
158,450 |
|
Distribution costs |
26,400 |
|
Administrative expenses |
27,200 |
|
Loan interest paid |
3,400 |
|
Inventory at 1/1/ 2019 |
26,550 |
|
Corporation tax under-provided for 2018 |
250 |
|
Trade receivables/ trade payables |
30,950 |
35,300 |
Revenue |
313,000 |
|
Equity shares of 20p each fully paid |
150,000 |
|
Retained earnings at 1/1/2019 |
121,400 |
|
8% loan note (redeemable 2025) |
42,500 |
|
Revaluation reserve at 1/1/2019(arising from land and buildings) |
18,500 |
|
Deferred tax |
9,000 |
|
Bank |
3,700 |
|
765,500 |
765,500 |
The following notes are relevant:
£000 |
|
Direct materials cost |
9,000 |
Direct labour cost |
6,000 |
Installation costs |
2,000 |
Pre-production testing |
2,000 |
Directly attributable overheads |
3,000 |
General and administrative overheads |
2,500 |
The manufacture of the plant was completed on 30 September 2019 and the plant was brought into immediate use, but its cost has not yet been capitalised.
Required:
(Note: A Statement of Changes in Equity is NOT required)
Current ratio |
1.50 |
Quick ratio |
0.90 |
Inventory days |
80 days |
Receivable days |
40 days |
Payable days |
40 days |
Calculate the relevant ratios for Rapcap plc and comment on the liquidity position of the company and its management of working capital.