Accounting for Managers: Solutions and Analysis

ACCOUNTING FOR MANAGERS
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Contents
Solution 1:.............................................................................................................................................3
Solution 2:.............................................................................................................................................4
Solution 3:.............................................................................................................................................9
Bibliography........................................................................................................................................11
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Solution 1:
Referring to the financial statements of Aristocrat Leisure Limited the following data has
been extracted:
Particulars 2017 2016 2015 2014 2013
Inventory 116 124 102 76 65
Debtors 512 433 440 329 352
Creditors 460 435 361 176 163
Cogs 968 873 679 386 366
Sales 2,454 2,129 1,576 848 798
Inventory Turnover ratio -
a 45 47 48 67 32
Debtor Turnover ratio - b 70 75 89 147 80
Creditor Turnover ratio - c 169 167 144 161 81
Cash Cycle - a+b-c -53 -44 -8 53 31
The cash flow statement of the company shows change in net cash and cash equivalents from
negative $35.2 million to $266 million. Increase in cash flow from operating actives was
witnessed form $ 680.5 million in 2016 to $ 799.1 million in 2017. The major contributor
towards the variance was increased receipt from debtors.
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Solution 2:
In the selling plan initially formulated, the management planned on selling 5000 units.
Following is the financial data related to such plan:
Financial data of FreeWheels from last year
Sales 5,000
Selling price 420
Variable manufacturing cost 144
Fixed manufacturing costs 4,60,000
Variable selling and administrative costs 36
Fixed selling and administrative costs 5,00,000
Profit statement
Particulars Amount
Sales 21,00,000
Less:
Manufacturing Cost- Variable 7,20,000
Manufacturing Cost- Fixed 4,60,000
Selling and administrative expense- Variable 1,80,000
Selling and administrative expense- Fixed 5,00,000
Profit/Loss 2,40,000
Using this data we have the following:
Calculation of Break Even
Contribution (Sales-Variable
Cost) = 420-144-36 = 240
Break Even Point =
Fixed Cost
=
9,60,000
Contribution per
unit 240
= 4,000
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