For the year ended 31 Dec. 2018 £000 For the year ended 31 Dec. 2019 £000 £00 £000 6,000 Sales revenue Cost of sales Opening inventory Purchases 4,800 1,200 2,700 3,900 (450) 450 4,800 5,250 Less: Closing inventory Gross profit Operating expenses Finance cost Net profit (3,450) 1,350 (600) (150) (900) (4,350) 1,650 (675) (300) 675 600 As at year to 31 Dec. 2018 £000 As at year to 31 Dec. 2019 £000 6,000 Statement of financial position £000 2,955 £000 Non-current assets Current assets Inventory Receivables – trade Prepayments Cash 450 900 90 75 750 1200 105 15 2,070 8,070 1,515 Issued share capital Share premium account Retained earnings 4,470 900 300 1,125 900 300 1,650 2,850 2,325 Non-current liabilities 10% loan notes Current liabilities Payables – trade Accruals 1,500 3,000 570 75 2,100 120 645 4,470 2,220 8,070

For the year ended 31 Dec. 2018 £000 For the year ended 31 Dec. 2019 £000 £00 £000 6,000 Sales revenue Cost of sales Opening inventory Purchases 4,800 1,200 2,700 3,900 (450) 450 4,800 5,250 Less: Closing inventory Gross profit Operating expenses Finance cost Net profit (3,450) 1,350 (600) (150) (900) (4,350) 1,650 (675) (300) 675 600 As at year to 31 Dec. 2018 £000 As at year to 31 Dec. 2019 £000 6,000 Statement of financial position £000 2,955 £000 Non-current assets Current assets Inventory Receivables – trade Prepayments Cash 450 900 90 75 750 1200 105 15 2,070 8,070 1,515 Issued share capital Share premium account Retained earnings 4,470 900 300 1,125 900 300 1,650 2,850 2,325 Non-current liabilities 10% loan notes Current liabilities Payables – trade Accruals 1,500 3,000 570 75 2,100 120 645 4,470 2,220 8,070

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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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Calculate for each year

(i) Return on capital employed
(ii) Net profit margin
(iii) Total Payable days

For the year ended
For the year ended
31 Dec. 2018
31 Dec. 2019
£00
£000
£000
£000
Sales revenue
Cost of sales
4,800
6,000
Opening inventory
Purchases
1,200
2,700
450
4,800
3,900
(450)
5,250
(900)
|Less: Closing inventory
Gross profit
Operating expenses
Finance cost
(3,450)
(4,350)
1,350
(600)
(150)
1,650
(675)
(300)
Net profit
600
675
As at year to 31 Dec.
2019
£000
6,000
Statement of financial position
As at year to 31 Dec.
2018
£000
£000
£000
Non-current assets
Current assets
Inventory
Receivables – trade
Prepayments
Cash
2,955
450
900
750
1200
105
15
90
75
1,515
2,070
4,470
8,070
Issued share capital
Share premium account
Retained earnings
900
300
1,125
900
300
1,650
2,325
2,850
Non-current liabilities
10% loan notes
Current liabilities
Payables – trade
Accruals
1,500
3,000
570
2,100
75
645
120
2,220
4,470
8,070

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