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Post Mid Term - Assignment No 1 - Deriving Profitability From Business Indicators

The document provides business information for ABC Bakery for April 2021 to calculate profitability and return on investment. Key details include: - Daily footfalls of 250 customers with 82% purchase rate. Average spending is Rs. 260 per customer. Bakery is open 25 days. - Product margin is 24% of sales. Salaries total Rs. 75,000. Other expenses are Rs. 35,000 for electricity and Rs. 28,000 for miscellaneous. - Total fixed asset investment is Rs. 8,000,000. Depreciation is Rs. 35,250 based on furnishing and equipment rates. - Net income is Rs. 146,550 after expenses. Profit after 22% tax is

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149 views

Post Mid Term - Assignment No 1 - Deriving Profitability From Business Indicators

The document provides business information for ABC Bakery for April 2021 to calculate profitability and return on investment. Key details include: - Daily footfalls of 250 customers with 82% purchase rate. Average spending is Rs. 260 per customer. Bakery is open 25 days. - Product margin is 24% of sales. Salaries total Rs. 75,000. Other expenses are Rs. 35,000 for electricity and Rs. 28,000 for miscellaneous. - Total fixed asset investment is Rs. 8,000,000. Depreciation is Rs. 35,250 based on furnishing and equipment rates. - Net income is Rs. 146,550 after expenses. Profit after 22% tax is

Uploaded by

PRACHI DAS
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Post Mid Term - Assignment No 1 - Deriving Profitability from Business Indicators

The following infnormation is provided to you about ABC Bakery for the month of April 2021. You are
requested to compute the profitability of the bakery and the return on investments on annuallized basis
assuming the figures of April are monthly average figures.

A. Business Information Unit Values

Daily Footfalls in the bakery Nos 250

Footfalls to purchase ratio % 82.0%

Average spending per customer Rs 260

No of days the bakery is open in April Days 25

B. Average Product Margin on sale value % 24.0%

C. Manpower employed by the bakery No of Employees Salary / PM

Supervisor 1 22,000

Salesmen at the counter 3 14,000

Helpers and cleaning staff 1 11,000


D. Other Expenses

Electricity and Power Expenses Rs / Mth 35,000

Miscellaneous running expenses Rs / Mth 28,000

E. Capital Investment make in the Bakery

Cost of Shop Rs 6,000,000

Furnishing & Fixtures Rs 600,000

Equipmetns Rs 900,000

Working Capital Rs 500,000

Total Investments Rs 8,000,000

G. Deprecitaion on Fixed Assetts

Cost of Shop % / Year 0.0%


Furnishing & Fixtures % / Year 30.0%
Equipmetns % / Year 27.0%

H. Income Tax Rate % / Yr 22.0%


Solution Unit Values

Daily Footfalls Nos 250

Footfalls to Purchase ratio % 82%

Therefore total footfalls will be 205

Average Spending by each customer Rs. 260

Number of days the bakery is open in Apri Days 25


Total Sales=Total footfalls*Average
spending by each customer*number of 1,332,500
days the bakery is open

Product margin on sale value=total


319,800
sales*24%

(-)Other expenditures

a) Fixed Salaries(note 1) Rs. -75,000

b) Electricity and Power Expenditure Rs. -35,000

c) Miscelleneous Expenditure Rs. -28,000

d) Depreciation on Fixed Assets(note 2) Rs. -35,250

Total Expenses Rs. -173,250

Net Income=Product Margin-Other


Rs. 146,550
Expenditures

Income Tax % 22%

Profit After Tax Rs. 114,309

Total Investment Rs. 8,000,000

For ROI, Refer working note 3


Working Notes:-

1.Computation of
Salary
Number of
Particulars Salary p.m Salary
Staff
Supervisor 1 22,000 22,000
Salesman at the
3 14,000 42,000
counter
Helper and
1 11,000 11,000
cleaning staff
Total 75,000

2. Depreciation
on Fixed Assets

Cost of Depreciation
Particulars Depreciation
Asset %
Furnishing and
600,000 30% 180,000
Fixtures
Equipments 900,000 27% 243,000
Total 423,000
Depreciation
35,250
p.m.
3. Return on
Investments
Total Return after
114,309
tax(PAT)

Total Investments 8,000,000

Therefore,
(K16/K17) 17.15%
ROI(p.a.)
*12*100

Done By

Prachi Das
20BSP1623
Section A

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