The following are the values for the month. Calculate the following ratios based on this data Sales 860000 Gross profit 215000 Net profit 77400 Current assets 162000 Current liabilities 81000 Closing stock 64800 Ordinary Share capital 800,000 Long-term loan 516000 Retained Earnings 232000 Q) Calculate Debt/Equity, gross profit ratio and current ratio

The following are the values for the month. Calculate the following ratios based on this data Sales 860000 Gross profit 215000 Net profit 77400 Current assets 162000 Current liabilities 81000 Closing stock 64800 Ordinary Share capital 800,000 Long-term loan 516000 Retained Earnings 232000 Q) Calculate Debt/Equity, gross profit ratio and current ratio

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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Question

The following are the values for the month. Calculate the following ratios based on this data

Sales 860000

Gross profit 215000

Net profit 77400

Current assets 162000

Current liabilities 81000

Closing stock 64800

Ordinary Share capital 800,000

Long-term loan 516000

Retained Earnings 232000

Q) Calculate Debt/Equity, gross profit ratio and current ratio

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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For Financial year 2021: Current ratio = Current assets / Current liabilities = 43.133 / 29.613 = 1.46 (2.d.p) Debt-to-equity = Total liabilities / Total equity = (29.613 + 25.382) / 47.069 = 1.17 (2.d.p) Return on total assets = Net profit / Average total assets = (-11.195) / 101.964 = -0.11 (2.d.p) Profit margin ratio = Net profit / Net sales = (-11.195) / 81.79 = -0.14 (2.d.p) Debt-to-asset = Total liabilities / Total assets = (29.613 + 25.382) / 101.964 = 0.54 (2.d.p) Cash flow on total assets = Net cash flow from operating activities / Average total assets = 4.717 / 101.964 = 0.05 (2.d.p) For Financial year 2022: Current ratio = Current assets / Current liabilities = 49.476 / 32.754 = 1.51 (2.d.p) Debt-to-equity = Total liabilities / Total equity = (32.754 + 27.625) / 46.732 = 1.29 (2.d.p) Return on total assets = Net profit / Average total assets = (-0.336) / 107.111 = -0.003 (3.d.p) Profit margin ratio = Net profit / Net sales = (-0.336) / 115.56 = -0.003 (3.d.p) Debt-to-asset…