According to the information available in Income and Financial position statements in Part A, calculate the following ratios for Linda’s business Competitors Average • Net profit margin 31% • Gross profit margin 54% • Current ratio 2.87x • Acid test ratio 1.35x • Accounts receivable collection period 50 days • Accounts payable payment period 72 days income statement revenue from operation 3900 otherincome rent received 500 total 4400 less purchases returns 2350 changes in stock (opening -closing stock ) -250 repairs 80 wages 820 rent paid 1000 statement of finance position linda capital 14600 van a/c 3000 +profit 400 15000 laptop 1000 cash 7120 closing stock 250 bank 3080 trade receivables fred 400 trade payable - toy ltd 2350 car 2500 17350 17350 ii. Assuming Linda’s competitor’s ratio averages are as stated above: Analyse her performance with reference to each of the ratios calculated in comparison to those of her competitor

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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According to the information available in Income and Financial position statements
in Part A, calculate the following ratios for Linda’s business
Competitors Average
• Net profit margin 31%
• Gross profit margin 54%
• Current ratio 2.87x
• Acid test ratio 1.35x
• Accounts receivable collection period 50 days
• Accounts payable payment period 72 days

income statement

revenue from operation	3900
otherincome rent received	500
total	4400
less purchases returns	2350
changes in stock (opening -closing stock )	-250
repairs	80
wages	820
rent paid	1000

statement of finance position

linda capital 14600		van a/c	3000
+profit 400	15000	laptop	1000
		cash	7120
		closing stock	250
		bank	3080
		trade receivables fred	400
trade payable - toy ltd	2350	car	2500
	17350		17350

ii. Assuming Linda’s competitor’s ratio averages are as stated above: Analyse her performance
with reference to each of the ratios calculated in comparison to those of her
competitor

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