a) Based on the information provided, calculate the following ratios for the years ended 31December 2021 and 2020.You should give the formula for each ratio, in addition to your calculation.I. Gross profit marginII. Operating profit marginIII. Return on equityIV. Current ratioV. Gearing Question 1Mabel is a potter and sells her pottery at stalls that she rents in four tourist information centresacross the south of England.Extracts from her financial statements for the years ended 31 December 2021 and 2020 areshown below.Statement of profit or loss for the year ended 31 December:202128,900|(16,500)12,400(3,800)8,600|(4,000)4,6002020Revenue27,200(14,000)13,200(3,600)9,600Cost of salesGross profitOperating expensesOperating profitNon-operating expensesNet profit9,600Statement of financial position as at 31 December:2021Non-current assetsCurrent assetsTotal assets22,6604,36027,020202020,9203,75024,670EquityNon-current liabilitiesCurrent liabilitiesEquity and liabilities20,9403,0003,08027,02016,3403,5004,83024,670The following information is also relevant:In July 2021 the rent on one of Mabel's stalls was increased significantly for the third time inthree years so she decided not to renew the annual contract. She sold the shop fittings for£1,500 cash, making a loss on disposal of £400. She transferred the inventory from this store toher other shops. This closed store represented 20% of Mabel's sales for 2020.The closure resulted in two staff being made redundant at a cost of £3,600.In early 2021, Mabel accepted a 12% cost increase from her supplier of clay. She felt unable topass this on to her customers through an increase in sales prices. Requirement:a) Based on the information provided, calculate the following ratios for the years ended 31December 2021 and 2020.You should give the formula for each ratio, in addition to your calculation.Page 2 of 8Gross profit marginII.I.Operating profit marginII.Return on equityCurrent ratioV. GearingIV.b) By comparing the financial information for years ended 31 December 2021 and 2020, andreviewing your ratio calculations, comment on the profitability, liquidity, and long-termsolvency of Mabel's business over the past year. You should use the other information givento suggest reasons for any changes identified.If an investor was interested in buying Mabel's business and was presented with theseresults, what further advice would you give them?

Sl No Ratio Formula 2021 2020 Equation Ratio Equation Ratio i Gross Profit Margin Gross…

a) Based on the information provided, calculate the following ratios for the years ended 31 December 2021 and 2020. You should give the formula for each ratio, in addition to your calculation. I. Gross profit margin II. Operating profit margin III. Return on equity IV. Current ratio V. Gearing

a) Based on the information provided, calculate the following ratios for the years ended 31 December 2021 and 2020. You should give the formula for each ratio, in addition to your calculation. I. Gross profit margin II. Operating profit margin III. Return on equity IV. Current ratio V. Gearing

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter6: Deductions And Losses: In General

Section: Chapter Questions

Problem 44P

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