Equity: Opening capital 85,000 80,000 Add: Net profit 105,000 155,000 190,000 235,000 Less: Drawings (39,000) 151,000 (58,500) 176,500 Current liabilities Trade payables 174,000 101,000 325,000 277,500 Required: (a) Calculate the following ratios for each business: (vii) Trade payables turnover days. (b) Drawing upon all your knowledge of accounting, comment upon the differences and similarities of the accounting ratios for Home Furnitures and Comfort Furnitures. Which business seems to be the most efficient? Give possible reasons.
Question 2
You are to study the following financial statements for two furniture stores and
then answer the questions which follow:
Home Furnitures Comfort Furnitures
RM RM RM RM
Statement of Profit or Loss
Sales 700,000 950,000
Less: Cost of goods sold:
Opening inventories 150,000 100,000
Purchases 300,000 420,000
450,000 520,000
Less: Closing inventories (115,000) (335,000) (95,000) (425,000)
Gross profit 365,000 525,000
Less: Expenses:
Wages & salaries 190,000 300,000
Other expenses 65,000 (260,000) 50,000 (370,000)
Net profit 105,000 155,000
Non-current assets
Equipment 50,000 20,000
Current assets
Inventories 115,000 95,000
Trade receivables 135,000 150,000
Bank 25,000 275,000 12,500 257,500
325,000 277,500
Equity:
Opening capital 85,000 80,000
Add: Net profit 105,000 155,000
190,000 235,000
Less: Drawings (39,000) 151,000 (58,500) 176,500
Current liabilities
Trade payables 174,000 101,000
325,000 277,500
Required:
(a) Calculate the following ratios for each business:
(vii) Trade payables turnover days.
(b) Drawing upon all your knowledge of accounting, comment upon the
differences and similarities of the accounting ratios for Home Furnitures
and Comfort Furnitures. Which business seems to be the most efficient?
Give possible reasons.
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