CHAPTER 8 Analysis and interpretation of financial statements 367Compre Ltd
Balance sheet2017 2016Property, plant and equipment
Agricultural assets
Intangible assets
Deferred tax assets
Other non-current assets3 232
20 612
0
20
409 200
59 910
1 563
47
0Total non-current assets 24 109 70 980Total assets 27 944 78 516Current liabilities
Payables
Interest-bearing liabilities
Current tax liabilities
Provisions943
2 730
1 138
1 4303 872
1 158
1 216
278Total current liabilities 6 241 6 524Non-current liabilities
Interest-bearing liabilities
Deferred tax liabilities
Provisions7 541
409
126 657
757
1Total non-current liabilities 7 951 27 415Total liabilities 14 192 33 939Net assets $ 13 752 $ 44 577Shareholders’ interest
Contributed equity
Reserves
Retained earnings10 144
1 104
2 50435 655
1 745
7 177Total equity $ 13 752 $ 44 5778.28 LO5
Coconut Plantations Pty Ltd’s financial records reveal the following at 30 June 2018.
Net sales (all credit)
Cost of sales
Accounts receivable — beginning
Accounts receivable — ending
Inventory — beginning
Inventory — ending$1 675 000
1 025 000
93 010
145 000
175 000
170 000a. Assuming a 365-day year, calculate the days inventory ratio. Interpret and explain this ratio.
b. Coconut Plantations Pty Ltd proposes to improve control of inventory and to further reduce
days inventory levels by five days. If this is achieved, calculate how many times inventory
would be turned over per annum. Estimate by how much the average inventory would need to
be reduced.
c. Assuming a 365-day year, calculate the days debtors ratio. Interpret and explain this ratio.
d. Advise Jo Geter, the sole shareholder of Coconut Plantations Pty Ltd, what actions can be taken
to improve collections from debtors.