FINANCIAL RATIOS QUESTION 1 The following financial statements were prepared by the accountants of KOOWOOD Company Limited KOOWOÓD Company Limited Statement of Profit or Loss and Retained Earnings for the year ended 31s* December, 2018 GH¢ 1,360,000 GH¢ Sales Less cost of sales: Opening Inventory Add purchases 331,500 969,000 1,300,500 (484,500) (816,000) 544,000 Less closing Inventory Gross profit Administration expenses Selling and distribution expenses Operating profit Financial expenses Net profit for the year Dividend paid 260,000 200,000 460,000 84,000 (16,000) 68,000 (51,000) 17,000 25,500 42,500 Income surplus b/f Income surplus c/f *ignore taxation Statement of financial position as at 31st December, 2018 GH¢ GH¢ GH¢ 510,000 Non Current Assets at Cost Less depreciation 170,000 340,000 Current Assets: Inventory Trade Receivables Cash and bank 484,500 187,000 93,500 765,000 Current liabilities: Trade Payables Working Capital Capital Employed (255,000) 510,000 850,000 Financed by: Stated capital Income surplus 680,000 42,500 722,500 Non-current liability 7% loạn Note 127,500 850,000 Earnings per share GH¢0.10 Current market price/share GH¢2.00 You are required to calculate for KOOWOOD Limited Company the following (a.) Current ratio; (b.) Acid test ratio; (c.) Debtors collection period (in months); (d.) Creditors payment period (in months); (e.) Rate of stock turnover; (f) Return on Capital Employed (g) Net profit margin (h) Gross profit margin (1) Price/Earnings ratio

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Chapter1: Financial Statements And Business Decisions
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FINANCIAL RATIOS
QUESTION 1
The following financial statements were prepared by the accountants of KOOWOOD
Company Limited
KOowoÓD Company Limited
Statement of Profit or Loss and Retained Earnings for the year ended 31st December, 2018
GH¢
GH¢
1,360,000
Sales
Less cost of sales:
Opening Inventory
Add purchases
331,500
969,000
1,300,500
(484,500)
Less closing Inventory
Gross profit
Administration expenses
Selling and distribution expenses
Operating profit
Financial expenses
Net profit for the year
Dividend paid
(816,000)
544,000
260,000
200,000
460,000
84,000
(16,000)
68.000
(51,000)
17,000
25,500
42,500
Income surplus b/f
Income surplus c/f
*ignore taxation
Statement of financial position as at 31st December, 2018
GH¢
GH¢
GHC
Non Current Assets at Cost
510,000
Less depreciation
170,000
340,000
Current Assets:
Inventory
Trade Receivables
Cash and bank
484,500
187,000
93,500
765,000
Current liabilities:
Trade Payables
Working Capital
Capital Employed
(255,000)
510,000
850,000
Financed by:
Stated capital
Income surplus
680,000
42,500
722,500
Non-current liability
7% loạn Note
127,500
850,000
Earnings per share GH¢0.10
Current market price/share GH¢2.00
You are required to calculate for KOOWOOD Limited Company the following
(a.) Current ratio%3;
(b.) Acid test ratio;
(c.) Debtors collection period (in months);
(d.) Creditors payment period (in months);
(e.) Rate of stock turnover;
(f) Return on Capital Employed
(g) Net profit margin
(h) Gross profit margin
(i) Price/Earnings ratio
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Transcribed Image Text:12:41 A Edit 50 FINANCIAL RATIOS QUESTION 1 The following financial statements were prepared by the accountants of KOOWOOD Company Limited KOowoÓD Company Limited Statement of Profit or Loss and Retained Earnings for the year ended 31st December, 2018 GH¢ GH¢ 1,360,000 Sales Less cost of sales: Opening Inventory Add purchases 331,500 969,000 1,300,500 (484,500) Less closing Inventory Gross profit Administration expenses Selling and distribution expenses Operating profit Financial expenses Net profit for the year Dividend paid (816,000) 544,000 260,000 200,000 460,000 84,000 (16,000) 68.000 (51,000) 17,000 25,500 42,500 Income surplus b/f Income surplus c/f *ignore taxation Statement of financial position as at 31st December, 2018 GH¢ GH¢ GHC Non Current Assets at Cost 510,000 Less depreciation 170,000 340,000 Current Assets: Inventory Trade Receivables Cash and bank 484,500 187,000 93,500 765,000 Current liabilities: Trade Payables Working Capital Capital Employed (255,000) 510,000 850,000 Financed by: Stated capital Income surplus 680,000 42,500 722,500 Non-current liability 7% loạn Note 127,500 850,000 Earnings per share GH¢0.10 Current market price/share GH¢2.00 You are required to calculate for KOOWOOD Limited Company the following (a.) Current ratio%3; (b.) Acid test ratio; (c.) Debtors collection period (in months); (d.) Creditors payment period (in months); (e.) Rate of stock turnover; (f) Return on Capital Employed (g) Net profit margin (h) Gross profit margin (i) Price/Earnings ratio DO Tools Mobile View Share
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