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Competitors Average Net profit margin Current Acid test ratio Gross Accounts receivable Accounts collection period payable payment period 27 Days 12Days profit margin ratio 16 Days 28 Days Year 2019 0.32 0.55 2.7 1.34 Year 2020 0.28 0.56 2.6 1.32 26 Days 17 Days Year 2021 0.02 0.08 2.8 1.38 The ratios for Anne's business for October 2021 are as calculated below - Net Profit Gross Profit Current Acid Test Accounts Accounts Margin Margin Ratio Ratio receivable payable collection payment period 389.18 days period Year 2021 -0.25 0.14 3.08 3.01 9.77 days 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

Competitors Average Net profit margin Current Acid test ratio Gross Accounts receivable Accounts collection period payable payment period 27 Days 12Days profit margin ratio 16 Days 28 Days Year 2019 0.32 0.55 2.7 1.34 Year 2020 0.28 0.56 2.6 1.32 26 Days 17 Days Year 2021 0.02 0.08 2.8 1.38 The ratios for Anne's business for October 2021 are as calculated below - Net Profit Gross Profit Current Acid Test Accounts Accounts Margin Margin Ratio Ratio receivable payable collection payment period 389.18 days period Year 2021 -0.25 0.14 3.08 3.01 9.77 days 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

FINANCIAL ACCOUNTING
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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Kindly explain the comparision of ratios as per the attached question - the points of comparision and the impact of each factor 

Competitors Average Net profit margin Current Acid test ratio Gross Accounts receivable Accounts profit margin collection period payable payment period 27 Days 12Days ratio 16 Days 28 Days Year 2019 0.32 0.55 2.7 1.34 Year 2020 0.28 0.56 2.6 1.32 26 Days 17 Days Year 2021 0.02 0.08 2.8 1.38 The ratios for Anne's business for October 2021 are as calculated below - EFEEBE Net Profit Gross Profit Current Acid Test Accounts Accounts Margin Margin Ratio Ratio receivable payable collection period 9.77 days payment period 389.18 days Year 2021 -0.25 0.14 3.08 3.01 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
Transcribed Image Text:Competitors Average Net profit margin Current Acid test ratio Gross Accounts receivable Accounts profit margin collection period payable payment period 27 Days 12Days ratio 16 Days 28 Days Year 2019 0.32 0.55 2.7 1.34 Year 2020 0.28 0.56 2.6 1.32 26 Days 17 Days Year 2021 0.02 0.08 2.8 1.38 The ratios for Anne's business for October 2021 are as calculated below - EFEEBE Net Profit Gross Profit Current Acid Test Accounts Accounts Margin Margin Ratio Ratio receivable payable collection period 9.77 days payment period 389.18 days Year 2021 -0.25 0.14 3.08 3.01 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
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