What is the effect of an increase in trade receivables on cash flows from operating activities?
a. Increase in cash flow
b. No effect on cash flow
c. Decrease in cash flow
d. Increase in financing activities
,Qumbu Energy Ltd installs wind power turbines for renewable energy projects in OR Tambo District
Municipality in the Eastern Cape. The company services government contracts and private energy firms,
operating from Qumbu with projects mainly along the municipality. In 2023, Qumbu Energy completed three
major installations, growing rapidly as renewable energy demand rises.
The following financial information is presented to you to assist in the analysis and interpretation of the
performance and the overall financial health of the business:
Extract from the statement of financial position information as at 28 February 2024:
2024 2023
R R
Share capital 166,000 166,000
Retained earnings (opening) 101,000 17,000
Long-term loan: Ndebele Corporation 142,000 182,000
Machinery and equipment (at carrying
208,000 243,000
amount)
Inventories 166,000 175,000
Prepayments 24,000 43,000
Trade payables control 170,000 152,000
Trade receivables control 125,000 93,000
Bank 58,000 44,000
Income tax payable 14,000 25,000
Revenue 609,000 549,000
Purchases 412,000 408,000
Operating and administrative expenses 87,000 78,000
Interest on long-term loan 18,000 21,000
Ordinary dividend paid 9,000 5,000
Additional information
1. The income tax expense for the year ending 2023 amounted to R32 000 and the income tax expense for
the current year is R22 000
2. The opening inventories for the financial year ending 2023 amounted to R96 000.
3. Assume that all purchases and sales are on credit.
The correct acid test ratio for the financial year ended 28 February 2023 is 1.02.
True
False
,Which of the following is a solvency ratio?
a. Current ratio
b. Trade receivables collection period
c. Debt-equity ratio
d. Gross profit percentage
, The trade receivables collection period ratio measures:
a. The time it takes to pay suppliers.
b. The time lag between sales and payment from customers.
c. The percentage of sales made on credit.
d. The proportion of cash sales over total revenue.
Clear my choice
a. Increase in cash flow
b. No effect on cash flow
c. Decrease in cash flow
d. Increase in financing activities
,Qumbu Energy Ltd installs wind power turbines for renewable energy projects in OR Tambo District
Municipality in the Eastern Cape. The company services government contracts and private energy firms,
operating from Qumbu with projects mainly along the municipality. In 2023, Qumbu Energy completed three
major installations, growing rapidly as renewable energy demand rises.
The following financial information is presented to you to assist in the analysis and interpretation of the
performance and the overall financial health of the business:
Extract from the statement of financial position information as at 28 February 2024:
2024 2023
R R
Share capital 166,000 166,000
Retained earnings (opening) 101,000 17,000
Long-term loan: Ndebele Corporation 142,000 182,000
Machinery and equipment (at carrying
208,000 243,000
amount)
Inventories 166,000 175,000
Prepayments 24,000 43,000
Trade payables control 170,000 152,000
Trade receivables control 125,000 93,000
Bank 58,000 44,000
Income tax payable 14,000 25,000
Revenue 609,000 549,000
Purchases 412,000 408,000
Operating and administrative expenses 87,000 78,000
Interest on long-term loan 18,000 21,000
Ordinary dividend paid 9,000 5,000
Additional information
1. The income tax expense for the year ending 2023 amounted to R32 000 and the income tax expense for
the current year is R22 000
2. The opening inventories for the financial year ending 2023 amounted to R96 000.
3. Assume that all purchases and sales are on credit.
The correct acid test ratio for the financial year ended 28 February 2023 is 1.02.
True
False
,Which of the following is a solvency ratio?
a. Current ratio
b. Trade receivables collection period
c. Debt-equity ratio
d. Gross profit percentage
, The trade receivables collection period ratio measures:
a. The time it takes to pay suppliers.
b. The time lag between sales and payment from customers.
c. The percentage of sales made on credit.
d. The proportion of cash sales over total revenue.
Clear my choice
