QUESTION 4The following information is available for DMS Wholesaler at 31 March 2020. All purchases and salesare on credit and all invoices should be paid within 30 days.RMSales250,000Stock 1 April 201921,000Stock 31 March 202019,000Purchases187,500Cost of sales189,500Gross profitNet profitCapital employed60,50030,000300,000Cash at bank1,000Accounts receivable15,000Accounts payable20,000 Requireda) Using the above information, calculate the following ratios to one (1) decimal place:(i)(ii)(ii1)(iv) Net profit margin(v)(vi)(vii) Accounts receivable's collection period in days(viii) Accounts payable's settlement period in daysCurrent ratioAcid test ratioGross profit marginReturn on capital employedRate of stock turnoverThe following ratios have been calculated for a competitor, RHG Wholesaler:Current ratio1.5:1Acid test ratio0.6:1Gross profit margin,Net profit marginReturn on capital employedAccounts receivable's collection periodAccounts payable's settlement period20%9%8%30 days42 daysRequired(b) (i) State which business performed better during the year ended 31 March 2020.(1i) Compare four (4) of the ratios that you have calculated for DMS Wholesaler with the samefour ratios provided for RHG Wholesaler to justify your answer.

Hi student Since there are multiple subparts, we will answer only first three subparts.

Answered: Required a) Using the above…

Required a) Using the above information, calculate the following ratios to one (1) decimal place: (i) (ii) (ii) Current ratio Acid test ratio Gross profit margin

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Which is the formula for Gross Margin ratio? Seleccione una: a. Cost of Sales / Gross Revenues b. Revenues / Gross Expenses c. Revenues - Expenses d. Gross Profit / Sales Revenues e. Net Margin + Expenses / Gross Revenues
Which of the following is a solvency ratio? a. Times interest earned. b. Inventory turnover ratio. c. Profit margin. d. Price-earnings ratio.
26. Given the following financial data for Alpha Company, calculate the ratios listed below the data. (Compute all ratios and percents to 2 decimal points.) Sales (all on credit) Cost of Goods Sold $650,000 422,500 Income before 78,000 Income Taxes Net Income 54,600 Ending Beginning Balances Balances Cash $19,500 $15,000 Accounts Receivable 65,000 59,800 (net) Merchandise 71,500 66,300 Inventory Plant and Equipment (net) 195,000 183,900 Total Assets $351,000 $325,000 Current $74,100 $100,200 Liabilities Long-Term Notes Payable 97,500 100,000 Stockholders' 179,400 124,800 Equity Total Liabilities and Stockholders' $351,000 $325,000 Equity
Accounting: type question:,,,,,, While calculating purchase price, the following values of assets are considered A. Book value B. New values fixed C. Averagevalues D. Market values
Hh1.
5. Know the calculations for all of the following ratios (see ratio sheet that can be used on the exam) and know the category (listed in Question 4) they fall in: Formula Category/Use Ratio Working Capital Current Assets - Current Liabilities Net credit sales/Average Accounts Receivable Turnover accounts receivable Asset Turnover Net sales/Average total assets Net income/Average total stockholders' equity Total liabilities/Total stockholders equity Net income/Net sales Return on Equity (ROE) Debt to equity Return on Sales (ROS) (also known as Net Margin Current Assets/Current Liabilities Cost of goods sold/Average inventory Quick assets/Current Current Ratio Inventory Turnover Quick Ratio liabilities Dividend Yield Dividends per share/Market price per share Net earnings available for common stock/Number of outstanding common shares Net income/Average total Earnings per Share (EPS) Return on Investment (ROI) assets Price Earnings Ratio (P/E) Market price per share/Earnings per share…
Comparative Income Statement Use the following comparative income statement form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part and on the Profitability Measures part. Compute any missing amounts and complete the horizontal analysis columns. Enter percentages as decimal amounts, rounded to one decimal place. When rounding, look only at the figure to the right of one decimal place. If 5, round up. For example, for 32.048% enter 32.0%. For 32.058% enter 32.1%. Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Operating income Other expense (interest) Income before income tax expense Income tax expense Net income Comparative Income Statement For the Years Ended December 31, 20Y6 and 20Y5 $ 20Y6 8,250,000 X (1,242,000) 20Y5 $7,287,000 (3,444,000) $3,843,000 $(1,457,600) (1,106,000) $(2,563,600) $1,279,400 (120,600) $1,158,800 (181,980) $976,820 $ $ $ Increase/(Decrease) Amount 823,000 X…
7. Consider the following: Code: A= Gross Profit to Net Sales Ratio B= Gross Profit to Cost of Goods Sold Ratio Which equation is correct? B = A a. 1 - A b. B = 1 + A A с. B = 1 - A A d. B = A 1 + A
Classify each of the following items as revenues (R), expenses (EX), or withdrawals (W). Cost of sales
27-A prepare the following: GROSS PROFIT RATIO PROFIT MARGIN RETURN ON ASSETS EARNINGS PER SHARE CURRENT RATIO ACID TEST RATIO DEBT RATIO
On a multiple step income statement, the account interest expense would be located under A) Net sales B) COGS C) Other Revenues and expenses
Calculate gross profit percentage and return on sales ratio