You have been provided with the following information for City Projects Ltd:Statement of Comprehensive Income for the year ended 31 March 2021RRevenue (all credit)Gross profitOperating profitInterest expense610 000390 000170 00017 000|Profit before tax153 000Net profit after tax110 000Statement of Financial Position as at 31 March 2021RRAssetsNon -current assets700 000Current assets340 000Inventory70 000REGENT BUSINESS SCHOOL (RBS) JANUARY 202216POSTGRADUATE DIPLOMA IN PROJECT MANAGEMENT - ACADEMIC AND ASSESSMENT CALENDARDebtors150 000Bank120 0001 040 000Equity and LiabilitiesOwners' equity600 000Non-current liabilities300 000Current liabilities140 0001040 000Required:Calculate and comment on each of the following ratios (where applicable round off answers to twodecimal places):4.1 Gross margin4.2 Current ratio4.3 Acid-test ratio

Answer: Gross margin = Gross profit/ revenue Current ratio= Current assets/ Current liabilities…

Statement of Comprehensive Income for the year ended 31 March 2021 Revenue (all credit) Gross profit Operating profit Interest expense Profit before tax Net profit after tax R 610 000 390 000 170 000 17 000 153 000 110 000

Statement of Comprehensive Income for the year ended 31 March 2021 Revenue (all credit) Gross profit Operating profit Interest expense Profit before tax Net profit after tax R 610 000 390 000 170 000 17 000 153 000 110 000

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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Income Statement Sales revenue Cost of goods sold Gross profit Operating expenses (including interest on bonds) Pretax income Income tax Net income Balance Sheet Cash Accounts receivable (net) Merchandise inventory Prepaid expenses Property and equipment (net) Total assets Accounts payable Income taxes payable Bonds payable (interest rate: 10%) Common stock ($10 par value, 10,000 shares outstanding) Retained earnings Total liabilities and stockholders' equity Year 2 $453,000 250,000 203,000 167,000 36,000 10,800 $ 25,200 $ 6,800 42,000 25,000 200 130,000 $204,000 $ 17,000 1,000 70,000 100,000 16,000 $204,000 Year 1 $447,000 241,000 206,000 168,000 38,000 11,400 $ 26,600 $ 3,900 29,000 18,000 100 120,000 $171,000 $ 18,000 1,000 50,000 100,000 2,000 $171,000 Required: Interpret each element of the ratio analysis separately. Ensure accuracy by analyzing each ratio individually!
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