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a) According to the information available in Income and Financial position statements in Part A, calculate the following ratios for Anne's business for October 2021 Competitors Average Net profit Gross profit margin Accounts receivable Accounts payable payment period 27 Days 12Days Current Acid test margin ratio ratio collection period 16 Days 28 Days Year 2019 0.32 0.55 2.7 1.34 Year 2020 0.28 0.56 2.6 1.32 Year 2021 0.02 0.08 2.8 1.38 26 Days 17 Days

a) According to the information available in Income and Financial position statements in Part A, calculate the following ratios for Anne's business for October 2021 Competitors Average Net profit Gross profit margin Accounts receivable Accounts payable payment period 27 Days 12Days Current Acid test margin ratio ratio collection period 16 Days 28 Days Year 2019 0.32 0.55 2.7 1.34 Year 2020 0.28 0.56 2.6 1.32 Year 2021 0.02 0.08 2.8 1.38 26 Days 17 Days

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Please answer only to question b)

Ratios calculations and Financial statements are below:

Anne's business for October 2021

  1. Net profit Margin = net profit/sales = (210)/5600 = - 3.75%
  2. Gross profit margin = gross profit/sales = 770/5600 = 13.75%
  3. Current ratio= current assets/current liability= 15,840/5,150= 3.08
  4. Acid test ratio = (cash+ accounts receivable) / current liability = (7,340+8030+150)/5,150 = 3.02
  5. Accounts receivable collection period = Receivables / Average daily credit sales = 150/ (5600/360 days) = 9.64 days or 10 days
  6. Accounts payable payment period = Accounts Payable / Average daily purchases = (5,150/ (5,150/360 days) = 360 days  

 

PART B a) According to the information available in Income and Financial position statements in Part A, calculate the following ratios for Anne's business for October 2021 Competitors Average Current Acid test Net profit margin Accounts receivable Accounts collection period Gross profit margin ratio ratio payable 16 Days 28 Days рayment period 27 Days 12Days Year 2019 0.32 0.55 2.7 1.34 Year 2020 0.28 0.56 2.6 1.32 Year 2021 0.02 0.08 2.8 1.38 26 Days 17 Days b. Assuming Anne's competitor's ratio averages are as stated above for month October of years 2019, 2020 and 2021: Analyse her performance with reference to the ratios of October 2021 calculated in comparison to those of her competitor. Also, briefly explain the impact of Covid -19 outbreak on the average ratios (Maximum of 500 words).
Transcribed Image Text:PART B a) According to the information available in Income and Financial position statements in Part A, calculate the following ratios for Anne's business for October 2021 Competitors Average Current Acid test Net profit margin Accounts receivable Accounts collection period Gross profit margin ratio ratio payable 16 Days 28 Days рayment period 27 Days 12Days Year 2019 0.32 0.55 2.7 1.34 Year 2020 0.28 0.56 2.6 1.32 Year 2021 0.02 0.08 2.8 1.38 26 Days 17 Days b. Assuming Anne's competitor's ratio averages are as stated above for month October of years 2019, 2020 and 2021: Analyse her performance with reference to the ratios of October 2021 calculated in comparison to those of her competitor. Also, briefly explain the impact of Covid -19 outbreak on the average ratios (Maximum of 500 words).
Part B 1 - Microsoft Word (Product Activation Failed) Table Tools File Home Insert Page Layout References Mailings Review View PDFelement Design Layout 昂Find▼ A "ac Replace X Cut Calibri (Body) - A A Aa 请 , T - 11 A :=- - AаBЬСcDc AaBbСcDc AaBbC АаBЬСс А аВ АаВЬСс. AАаBЬСcDa AaBЬСcDa ab A Copy в I U Change Styles - Paste - abe x, x A- 2 - I Normal 1 No Spacing Heading 1 Heading 2 Title Subtitle Subtle Emp. Emphasis e Select - Format Painter Clipboard Font Paragraph Styles Editing Statement of Financial Position For the Month Ended October 31, 2021 October 31, 2021 Revenue ASSETS Sales 5,600 Current Assets Less: Cost of Goods Sold Cash 7,340 Purchases 5,400 Cash in Bank 8,030 Less: Purchase Return (250) Accounts Receivable 150 Inventory, October 31, 2021 (320) (4,830) Inventory, October 31, 2021 320 Total Current Assets 15,840 Gross Profit 770 Non-Current Assets Rent Revenue 800 Office Equipment 2,700 Total Revenue 1,570 Flat 45,000 Expenses: Car 12,000 Total Non-CurrentAssets 59,700 Repairs Expense 110 Wages Expense 820 TOTAL ASSETS 75,540 Rent Expense 850 (1,780) Net Income (Loss) (210) TOTAL LIABILITIES AND OWNER'S EQUITY Liabilities: Accounts Payable | 5,150 Total Liabilities 5,150 Owner's Equity: York, Capital 71,800 Less: York, Drawings (1,200) Page: 2 of 3 Words: 452 English (U.K.) 目單昆 目 60% 19:12 2 Type here to search 6°C ENG 12/01/2022
Transcribed Image Text:Part B 1 - Microsoft Word (Product Activation Failed) Table Tools File Home Insert Page Layout References Mailings Review View PDFelement Design Layout 昂Find▼ A "ac Replace X Cut Calibri (Body) - A A Aa 请 , T - 11 A :=- - AаBЬСcDc AaBbСcDc AaBbC АаBЬСс А аВ АаВЬСс. AАаBЬСcDa AaBЬСcDa ab A Copy в I U Change Styles - Paste - abe x, x A- 2 - I Normal 1 No Spacing Heading 1 Heading 2 Title Subtitle Subtle Emp. Emphasis e Select - Format Painter Clipboard Font Paragraph Styles Editing Statement of Financial Position For the Month Ended October 31, 2021 October 31, 2021 Revenue ASSETS Sales 5,600 Current Assets Less: Cost of Goods Sold Cash 7,340 Purchases 5,400 Cash in Bank 8,030 Less: Purchase Return (250) Accounts Receivable 150 Inventory, October 31, 2021 (320) (4,830) Inventory, October 31, 2021 320 Total Current Assets 15,840 Gross Profit 770 Non-Current Assets Rent Revenue 800 Office Equipment 2,700 Total Revenue 1,570 Flat 45,000 Expenses: Car 12,000 Total Non-CurrentAssets 59,700 Repairs Expense 110 Wages Expense 820 TOTAL ASSETS 75,540 Rent Expense 850 (1,780) Net Income (Loss) (210) TOTAL LIABILITIES AND OWNER'S EQUITY Liabilities: Accounts Payable | 5,150 Total Liabilities 5,150 Owner's Equity: York, Capital 71,800 Less: York, Drawings (1,200) Page: 2 of 3 Words: 452 English (U.K.) 目單昆 目 60% 19:12 2 Type here to search 6°C ENG 12/01/2022
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