i. Use the information available in Income and Financial position statement in Part A and calculate the following ratios for David Competitors Average • Net profit margin 28% • Gross profit margin 65% • Current ratio 2.10x • Acid test ratio 1.50x • Accounts receivable collection period 47 days • Accounts payable payment period 65 days Net Profit Margin = Net Income/ Sales = 350/2300 = 15.22% Gross Profit = Sales Revenue + Ending Inventory - Purchases less purchase returns = 2300 + 250 - 1100 = 1450 Gross Profit Margin = Gross Profit/ Sales = 1450/2300 = 63.04% Current Ratio = Current Assets/ Current Liabilities Current Assets = Cash + Bank + Accounts Receivable + Inventory = 4050 + 17100 + 400 + 250 = 21800 Current Liabilities = Accounts Payable = 700 Current Ratio = 21800/700 = 31.14:1 please answer this QUESTION : ii. Assuming David’s competitor’s ratio averages are as stated above: Analyse his performance with reference to each of the ratios calculated in comparison to those of her competitor.
i. Use the information available in Income and Financial position statement
in Part A and calculate the following ratios for David
Competitors Average
• Net profit margin 28%
• Gross profit margin 65%
•
• Acid test ratio 1.50x
•
• Accounts payable payment period 65 days
Net Profit Margin = Net Income/ Sales = 350/2300 = 15.22%
Gross Profit = Sales Revenue + Ending Inventory - Purchases less purchase returns
= 2300 + 250 - 1100 = 1450
Gross Profit Margin = Gross Profit/ Sales = 1450/2300 = 63.04%
Current Ratio = Current Assets/ Current Liabilities
Current Assets = Cash + Bank + Accounts Receivable + Inventory
= 4050 + 17100 + 400 + 250 = 21800
Current Liabilities = Accounts Payable = 700
Current Ratio = 21800/700 = 31.14:1
please answer this QUESTION :
ii. Assuming David’s competitor’s ratio averages are as stated above:
Analyse his performance with reference to each of the ratios calculated
in comparison to those of her competitor.
Step by step
Solved in 2 steps
