Mr. Hussein is a trade supplier who has been approached by Al Shinas Trading LLC which is requesting credit terms for the first time. Their managing director has provided Mr. Hussein with the following extracts from the final accounts for the past two years and Mr. Hussein has approached you for advice.
Mr. Hussein is a trade supplier who has been approached by Al Shinas Trading LLC which is requesting credit terms for the first time.
Their managing director has provided Mr. Hussein with the following extracts from the
Hussein has approached you for advice.
Details 2019 (OMR) 2020 (OMR)
Accounts payables 75,000 65,000
Sales revenue 620,000 910,000
Equipment 30,000 22,000
Cost of Goods sold 400,000 350,000
Machinery 3,150,000 3,128,000
Inventory 50,000 80,000
Operating costs 192,000 170,000
Non-operating expenses 25,000 15,000
Common share capital 550,000 550,000
Bonds 95,000 90,000
Bank (25,000) 65,000
Accounts Receivables 50,000 85,000
Long-term loan 100,000 70,000
Shareholders’ fund 770,000 800,000
Cash 100,000 75,000
Prepaid expenses 500 200
A) Being a student of
Shinas Trading LLC using the tools (ratio analysis) for the two years given in the above information?
B) You are required to offer an advice to Mr. Hussien based on your calculations with regards to the viability of engaging in
a credit relationship with Al Shinas Trading LLC. Justify with logical reasons.
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