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The following extract of income statement is given
Operating profit :42000
Interest charges :(16000)
PBT :26000
Taxation. :(5460)
PAT: 20540Pind co has an operating profit margin of 15%,non current liabilities payable 50000 current ratio 1.5 and quick ratio of 0.9 Pind co has a receivable to cash ratio of 2:2.5 what is the receivable days ?
I know the answer but can’t understand the steps done here. Please help me out with a simple explanation to tackle similar questions in exam.
Thank you
You cannot learn an approach to this sort of question because every time it is different. What you do have to learn is all the various measures, and I go through them all in my free lectures.
You know the operating profit and the operating profit margin, so using these you can calculate what the total revenue is.
You know the current liabilities and the quick ratio, so using these you can calculate what the total of receivables and cash is.
Since the receivables to cash ratio is 2:2.5, the receivables must be 2/4.5 x the total of receivables plus cash.Therefore the receivables days will be (receivables / sales) x 365
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hi sir,
what about the standards and reward sections in building blocks?
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Why haven’t you mentioned about standards and rewards sections under fitzgerald and moon’s building blocks in the notes, if not in the lectures?
Because exam questions on Fitzgerald and Moon focus on the dimensions and how they might be measured.
Standards and rewards are relevant in lots of areas and are dealt with elsewhere in my notes and lectures.
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Oh, I see! Thanks for the clarification. Hope I didn’t come across as beng silly here 🙂
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