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Exercises on Cash Management and Profitability

Exercise on Cash Management Nr. 1

Applying the same analytical approach in the Examples on calculation and interpretation of Financial Ratios analyse the cash/liquidity performance during the first four years of operation of two retail companies A and B applying ratio analysis: Current Ratios, Quick Ratios, Working Capital.

Year One Companies A and B have the following Income Statements and Balance Sheets at the end of their first year of operation. Net profit for Company A is 25,000 and Company B 42,000.Opening equity for both companies is 146,000.

Drawings by shareholders were 46,000 for Company A and 63,000 for Company B.

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