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41.11A Study the following financial statements of two companies and then answer the questions -> which follow. Both companies are wholesalers of household products. The values shown are in £000s. Buscema Ltd Abraxas Ltd £000 £000 £000 £000 3,300 2,700 Income Statements Sales 216 Less Cost of goods sold Opening inventory Add Purchases Less Closing inventory 410 2,340 (460) 1,697 (233) (2,290) 1,010 (1,680) 1,020 Gross profit Less Expenses Wages and salaries Directors' remuneration Other expenses 712 85 569 175 168 147 (944) 66 (912) 108 Net profit Balance Sheets Non-current assets 474 210 Equipment at cost Less Depreciation to date (212) (52) 262 158 117 213 Vans (85) (55) Less Depreciation to date 128 62 390 220 Current assets 233 106 460 Inventory Accounts receivable Bank 524 8. 21 992 360 1,382 580 Total assets Less Current liabilities Accounts payable Net assets (744) 638 (179) 401 Equity Issued share capital Retained profits Total equity 260 378 80 321 638 401 equired: O Calculate the following ratios for both Abraxas Ltd and Buscema Ltd: () gross profit as percentage of sales; (ii) net profit as percentage of sales; (iii) expenses as percentage of sales; (iv) inventory turnover; (v) rate of return of net profit on capital employed (for the purpose of this question only, E capital as being total of share capitals + reserves at the date of the balance sheet); (vi) current ratio; (vii) acid test ratio; (vii) accounts receivable days; (ix) accounts payable days. Comment briefly on the performance of the two companies based on the ratios you have lated, suggesting possible reasons for your observations.

41.11A Study the following financial statements of two companies and then answer the questions -> which follow. Both companies are wholesalers of household products. The values shown are in £000s. Buscema Ltd Abraxas Ltd £000 £000 £000 £000 3,300 2,700 Income Statements Sales 216 Less Cost of goods sold Opening inventory Add Purchases Less Closing inventory 410 2,340 (460) 1,697 (233) (2,290) 1,010 (1,680) 1,020 Gross profit Less Expenses Wages and salaries Directors' remuneration Other expenses 712 85 569 175 168 147 (944) 66 (912) 108 Net profit Balance Sheets Non-current assets 474 210 Equipment at cost Less Depreciation to date (212) (52) 262 158 117 213 Vans (85) (55) Less Depreciation to date 128 62 390 220 Current assets 233 106 460 Inventory Accounts receivable Bank 524 8. 21 992 360 1,382 580 Total assets Less Current liabilities Accounts payable Net assets (744) 638 (179) 401 Equity Issued share capital Retained profits Total equity 260 378 80 321 638 401 equired: O Calculate the following ratios for both Abraxas Ltd and Buscema Ltd: () gross profit as percentage of sales; (ii) net profit as percentage of sales; (iii) expenses as percentage of sales; (iv) inventory turnover; (v) rate of return of net profit on capital employed (for the purpose of this question only, E capital as being total of share capitals + reserves at the date of the balance sheet); (vi) current ratio; (vii) acid test ratio; (vii) accounts receivable days; (ix) accounts payable days. Comment briefly on the performance of the two companies based on the ratios you have lated, suggesting possible reasons for your observations.

Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter9: Metric-analysis Of Financial Statements
Section: Chapter Questions
Problem 9.12E: Inventory analysis Costco Wholesale Corporation (COST) and Wal-Mart Stores Inc. (WMT) compete...
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Part 9 An introduction to tr which follow. Both companies are wholesalers of household products. The values shown are i questi Buscema Ltd -> Abraxas Ltd £000 £000 £000 £000 Income Statements Pre 3,300 2,700 Ger Sales or Less Cost of goods sold Opening inventory Add Purchases Less Closing inventory 410 216 89 2,340 1,697 (460) (233) El (2,290) 1,010 (1,680) 1,020 Gross profit Less Expenses Wages and salaries Directors' remuneration 712 569 85 175 Other expenses 147 168 (944) Net profit Balance Sheets (912) 108 66 Non-current assets Equipment at cost Less Depreciation to date 474 210 (212) (52) 262 158 Vans 213 117 Less Depreciation to date (85) (55) 128 62 390 220 Current assets Inventory Accounts receivable 460 233 524 106 Bank 8. 21 992 360 Total assets 1,382 580 Less Current liabilities Accounts payable Net assets (744) 638 (179) 401 Equity Issued share capital Retained profits Total equity 260 80 378 321 638 401 Required: (a) Calculate the following ratios for both Abraxas Ltd and Buscema Ltd: () gross profit as percentage of sales; (i) net profit as percentage of sales; (iii) expenses as percentage of sales; (iv) inventory turnover; (v) rate of return of net profit on capital employed (for the purpose of this question only, take capital as being total of share capitals + reserves at the date of the balance sheet); (vi) current ratio%; (vii) acid test ratio%; (viii) accounts receivable days; (ix) accounts payable days. (b) Comment briefly on the performance of the two companies based on the ratios you have calcu- lated, suggesting possible reasons for your observations.
Transcribed Image Text:Part 9 An introduction to tr which follow. Both companies are wholesalers of household products. The values shown are i questi Buscema Ltd -> Abraxas Ltd £000 £000 £000 £000 Income Statements Pre 3,300 2,700 Ger Sales or Less Cost of goods sold Opening inventory Add Purchases Less Closing inventory 410 216 89 2,340 1,697 (460) (233) El (2,290) 1,010 (1,680) 1,020 Gross profit Less Expenses Wages and salaries Directors' remuneration 712 569 85 175 Other expenses 147 168 (944) Net profit Balance Sheets (912) 108 66 Non-current assets Equipment at cost Less Depreciation to date 474 210 (212) (52) 262 158 Vans 213 117 Less Depreciation to date (85) (55) 128 62 390 220 Current assets Inventory Accounts receivable 460 233 524 106 Bank 8. 21 992 360 Total assets 1,382 580 Less Current liabilities Accounts payable Net assets (744) 638 (179) 401 Equity Issued share capital Retained profits Total equity 260 80 378 321 638 401 Required: (a) Calculate the following ratios for both Abraxas Ltd and Buscema Ltd: () gross profit as percentage of sales; (i) net profit as percentage of sales; (iii) expenses as percentage of sales; (iv) inventory turnover; (v) rate of return of net profit on capital employed (for the purpose of this question only, take capital as being total of share capitals + reserves at the date of the balance sheet); (vi) current ratio%; (vii) acid test ratio%; (viii) accounts receivable days; (ix) accounts payable days. (b) Comment briefly on the performance of the two companies based on the ratios you have calcu- lated, suggesting possible reasons for your observations.
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