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Exercises Financial Statement Analysis

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17 views

Exercises Financial Statement Analysis

Uploaded by

Yati Shaiful
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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QUESTION 1

The following information is available about a retail business owned by Henrietta.

Trading and Profit and Loss Account for the year ended 31 March 2023
RM RM
Sales 60 000
Opening inventory 10 000
Purchases 40 000
50 000
Closing inventory 20 000 30 000
Gross Profit 30 000
Expenses 10 000
Depreciation 5 000 15 000
Net Profit 15 000

Henrietta has invested RM75 000 capital in the business.

Henrietta is keen to know how well her business is performing and has obtained
the following accounting ratios for a similar business owned by Pauletta.

Percentage of Gross Profit to sales 40%


Percentage of Net Profit to sales 20%
Return on Capital Employed 25%

(a) State how the following ratios are calculated :


(i) percentage of gross profit to sales.
(ii) percentage of net profit to sales.
(iii) return on capital employed.

(b) Calculate the following ratios for the business owned by Henrietta:
(i) percentage of gross profit to sales.
(ii) percentage of net profit to sales.
(iii) return on capital employed.

(c) Explain ONE (1) reason why you think that :


(i) Henrietta’s business is better.
(ii) Pauletta’s business is better .

(d) Identify an internal and external group who have an interest in the
accounts of a business organization and give ONE (1) reason each why
they would be interested.

Internal group .

Reason .
External group .

Reason .

QUESTION 2

The following information is available for Brenda Plc at 31 March 2023. All sales
and purchases are on credit and all invoices should be paid within 30 days.

RM
Sales 500000
Inventory at 1 April 2022 42000
Inventory at 31 March 2023 38000
Purchases 375000
Cost of sales 379000
Gross Profit 121000
Net profit 60000
Capital employed 600000
Cash at bank 2000
Accounts Receivables 30000
Accounts payables 40000

(a) You are required to calculate the following accounting ratios by using the
above information :
(i) the current ratio.
(ii) the acid test ratio.
(iii) the percentage of gross profit to sales ratio.
(iv) the percentage of net profit to sales ratio.
(v) the net profit to capital employed ratio.
(vi) the rate of stock turnover.
(vii) debtor collection period.
(viii) creditor payment period.

(b) The following ratios for a close competitor Brandon Plc have been
calculated.

Current ratio 1.6 : 1


Acid test ratio 1.1 : 1
The percentage of gross profit to sales 23%
ratio
The percentage of net profit to sales 10%
ratio
Return on capital employed ratio 9
Rate of stock turnover 12
times
The debtor collection period 24 days
The creditor collection period 32 days

Which business performed better during the year ended 31 March 2023?
Use the ratios that you have calculated for Brenda Plc and the ratios
provided for Brandon Plc to justify your answer.

QUESTION 3

The following information has been extracted from the books of account of Betty
for the year to 31 January 2023 :

Statement of Comprehensive Income for the year to 31 January 2023


RM RM
Sales 100 000
Opening inventory 15 000
Purchases 65 000
80 000
Closing inventory 10 000 70 000
Gross Profit 30 000
Expenses 16 000
Net Profit 14 000

Statement of Financial Position as at 31 January 2023


RM RM
Non current assets 29 000
Current assets
Inventory 10 000
Accounts receivable 12 000
Cash 3 000
25 000
Less Current liabilities
Accounts payables 6 000 19 000
48 000

Financed by :
Capital 40 000
Add Net Profit 14 000
54 000
Less Drawings 6 000
48 000

(a) Required to calculate the following accounting ratios :


1. gross profit
2. net profit
3. return on capital employed
4. current ratio
5. acid test
6. inventory turnover
7. debtor collection period

(b) Based on the ratio calculated, comment on the performance of the


business.

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