Alex is currently considering to invest his money in one of the companies betweenCompany A and Company B. The summarized final accounts of the companies for theirlast completed financial year are as follows : (please check the images) a. Calculate the following ratios for Company A and Company B. State clearly theformulae used for each ratio:i. Gross Profit Marginii. Net Profit Marginiii. Inventory Turnover Period (days)+ Comment on each of the ratios calculated in part (a) above. Alex is currently considering to invest his money in one of the companies betweenCompany A and Company B. The summarized final accounts of the companies for theirlast completed financial year are as follows:Statements ofComprehensiveIncomeCompany ARMRMCompany BRMRMSales160,000(120,000)40,000240,000(180,000)60,000Cost of salesGross profitLess:Administration expensesSelling and distribution12,00018,0006,0009,500expensesOther operatingexpensesFinancial expenses10,0003,00014,000500(31,000)9,000(42,000)18,000Net profit..3/- Company ACompany BRMRMRMRMStatements ofFinancialPositionNon- currentAssets80,000180,000Current AssetsInventoryReceivables30,0006,0004,00050,00020,00010,000Bank40,000120,00080,000260,000Total AssetCapital and reservesOrdinary share capitalAccumulated profits60,00020,00080,000160,00075,000235,000Non Current liabilities10% Loan stock30,0005,000Current liabilitiesPayablesTotal Capital and reserves10,00020,000120,000260,000

i. Gross Profit Margin = Gross Profit / Sales ii. Net Profit Margin = Net Profit / Sales iii.…

Answered: a. Calculate the following ratios for…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Alex is currently considering to invest his money in one of the companies between
Company A and Company B. The summarized final accounts of the companies for their
last completed financial year are as follows : (please check the images)

a. Calculate the following ratios for Company A and Company B. State clearly the
formulae used for each ratio:
i. Gross Profit Margin
ii. Net Profit Margin
iii. Inventory Turnover Period (days)

+ Comment on each of the ratios calculated in part (a) above.

Alex is currently considering to invest his money in one of the companies between
Company A and Company B. The summarized final accounts of the companies for their
last completed financial year are as follows:
Statements of
Comprehensive
Income
Company A
RM
RM
Company B
RM
RM
Sales
160,000
(120,000)
40,000
240,000
(180,000)
60,000
Cost of sales
Gross profit
Less:
Administration expenses
Selling and distribution
12,000
18,000
6,000
9,500
expenses
Other operating
expenses
Financial expenses
10,000
3,000
14,000
500
(31,000)
9,000
(42,000)
18,000
Net profit
..3/-

Company A
Company B
RM
RM
RM
RM
Statements of
Financial
Position
Non- current
Assets
80,000
180,000
Current Assets
Inventory
Receivables
30,000
6,000
4,000
50,000
20,000
10,000
Bank
40,000
120,000
80,000
260,000
Total Asset
Capital and reserves
Ordinary share capital
Accumulated profits
60,000
20,000
80,000
160,000
75,000
235,000
Non Current liabilities
10% Loan stock
30,000
5,000
Current liabilities
Payables
Total Capital and reserves
10,000
20,000
120,000
260,000

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