Duration: 1 hour and 50 minutes (110 minutes)
Aids allowed: Non-programmable calculator
Instructions:
Please print your name and student number in the space provided. Select your lecture and tutorial sections.
You must use a pen. Do not use WHITEOUT.
Clearly show all computations in the test paper in order to obtain full marks for the problems.
Tests written in pencil will not be considered for remarking.
Please note the following:
Questions 1 to 3 relate to “SweetDrink Company”, which was actually Coca-Cola Company.
Questions were marked “holistically”. Contradictions could have resulted in mark deductions. Therefore,
even if one part of the answer was correct, a contradicting statement (or a statement that is not
consistent) could result in a deduction. This could result in a mark of zero for a question that was
“partially correct”.
,MARKS BREAKDOWN
Q1 /36 Q3 /4 TOTAL
Q2 /10 Q4 /10 /60
Questions 1 to 3 relate to SweetDrink Company
(SDC). The beverage company markets “more
than 500 nonalcoholic beverage brands, which
we group into the following category clusters:
sparkling soft drinks; water, enhanced water and
sports drinks; juice, dairy and plant-based
beverages; tea and coffee; and energy drinks”.
You can find selected financial statements for
SweetDrink Co. on the last page of this exam.
You can use the following formulas as needed.
Page 2 of 13
, QUESTION 1 (36 marks) Financial Statement Analysis – SweetDrink Co.
This question relates to SweetDrink Co. You can find selected financial statements for SweetDrink Co. on the last
page of this exam. Use those financial statements, as necessary, to answer the questions below.
PART I
REQUIRED: Calculate selected accounts receivable ratios and evaluate collections at SweetDrink Co. (6 marks)
2017 2016
Ratio Calculations (optional) Final answer Calculations (optional) Final answer
(required) (required)
Accounts 35,410 / 9.41 41,863 / 10.74
Receivable ((3,667 + 3,856)/2) ((3,856 + 3,941)/2)
Turnover
Ratio
Average 365/9.41 38.77 365/10.74 33.99
Collection
Period
Overall assessment of collections:
SweetDrink’s average collection period has increased significantly (by about 5 days) in 2017. This is a negative
development.
NOTE: We are making an assumption that all sales are credit sales.
Marks allocated as follows: 1 mark per ratio and 2 marks for consistent and appropriate analysis.
PART II
REQUIRED: Calculate selected inventory ratios and evaluate SweetDrink Co.’s ability to make quick sales. (6
marks)
2017 2016
Ratio Calculations (optional) Final answer Calculations (optional) Final answer
(required) (required)
Inventory 13,256 / 4.97 16,465 / 5.90
Turnover ((2,655 + 2,675)/2) ((2,675 + 2,902)/2)
Ratio
Days to Sell 365/4.97 73.38 365/5.90 61.82
Inventory
Overall assessment of sales:
SweetDrink Co.’s ability to sell inventory quickly deteriorated significantly in 2017 – by about 12 days. It takes the
company well over two months to sell inventory.
Marks allocated as follows: 1 mark per ratio and 2 marks for consistent and appropriate analysis.
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