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Part 1: CLO3 (8 marks) A. (3 marks) Sami Company sells one product S-550. The Company prepared its estimates for future sales in the coming four months as follows: The Company has a policy of maintaining inventory at the end of each month that is equal to

Part 1: CLO3 (8 marks)

  1. (3 marks)

    Sami Company sells one product S-550. The Company prepared its estimates for future sales in the coming four months as follows:

    The Company has a policy of maintaining inventory at the end of each month that is equal to 25% of the next months sales. The purchase price is AED 10 per unit regardless the quantity purchased during any month of the above four months.

    Required:
    Prepare the purchase budget for the first 3 months of 2018.

  2. (5 marks)
    William Company expects sales for the next three months to be as follows:

    The Companys experience suggests that 40% of sales are for cash and 60% are on credit for every month. The Company collects 50% of its credit sales in the month following the sale, 45% in the second month after sale, and 5% are uncollectible.
    Expected cash payments during the same three months are as follows:

    Cash available on hand at the beginning of January 2018 is expected to be AED 10,000. The Company has a policy of keeping AED 10,000 cash on hand at the end of each month. If necessary, loans are to be taken to meet this requirement at a cost of AED 1,000 per month as

page1image34344

January 2018

February 2018

March 2018

page1image38088

April 2018

page1image40224

Sales in units

5,000

6,000

4,000

4,500

page1image47272
 

January 2018

February 2018

March 2018

Sales in Dirhams

AED 150,000

AED 160,000

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AED 120,000

 

January 2018

February 2018

March 2018

Cash payments

AED 80,000

AED 78,000

AED 15,000

long as the loan is less than AED 100,000. Loans and its cost can be paid from any excess cash available at the end of each month. The Company had no loans outstanding as of December 31, 2017.
However, if there is excess cash in any month and no loans to be paid, the Company would invest this excess cash temporary to earn interest income.

Required:
Prepare the monthly cash budget for January, February, and March 2018.

Part 2 (7 marks)

ARAMEX is one of the fast delivery Company operating in UAE. Download the financial statements for 2016 from the Companys webpage or Dubai Financial Market. Read the financial statements and answer the following questions:

  1. Calculate two ratios to judge the liquidity situation of the Company over two years.

  2. Calculate two ratios to judge the solvency of the Company over two years

  3. Calculate two ratios to judge the Companys profitability over two years.

  4. Calculate the dividend yield ratio and price to earnings ratio for 2016. 

Posted in English, asked by rabea, 2 years ago. 626 hits.
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