According to the information available in Income and Financial position statements in Part A, calculate the following ratios for Linda’s business Competitors Average • Net profit margin 31% • Gross profit margin 54% • Current ratio 2.87x • Acid test ratio 1.35x • Accounts receivable collection period 50 days • Accounts payable payment period 72 days income statement revenue from operation 3900 otherincome rent received 500 total 4400 less purchases returns 2350 changes in stock (opening -closing stock ) -250 repairs 80 wages 820 rent paid 1000 statement of finance position linda capital 14600 van a/c 3000 +profit 400 15000 laptop 1000 cash 7120 closing stock 250 bank 3080 trade receivables fred 400 trade payable - toy ltd 2350 car 2500 17350 17350 ii. Assuming Linda’s competitor’s ratio averages are as stated above: Analyse her performance with reference to each of the ratios calculated in comparison to those of her competitor
According to the information available in Income and Financial position statements in Part A, calculate the following ratios for Linda’s business Competitors Average • Net profit margin 31% • Gross profit margin 54% • Current ratio 2.87x • Acid test ratio 1.35x • Accounts receivable collection period 50 days • Accounts payable payment period 72 days income statement revenue from operation 3900 otherincome rent received 500 total 4400 less purchases returns 2350 changes in stock (opening -closing stock ) -250 repairs 80 wages 820 rent paid 1000 statement of finance position linda capital 14600 van a/c 3000 +profit 400 15000 laptop 1000 cash 7120 closing stock 250 bank 3080 trade receivables fred 400 trade payable - toy ltd 2350 car 2500 17350 17350 ii. Assuming Linda’s competitor’s ratio averages are as stated above: Analyse her performance with reference to each of the ratios calculated in comparison to those of her competitor
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter15: Financial Statements And Year-end Accounting For A Merchandising Business
Section: Chapter Questions
Problem 4SEB: FINANCIAL RATIOS Based on the financial statements, shown on pages 603604, for McDonald Carpeting...
Related questions
Question
According to the information available in Income and Financial position statements
in Part A, calculate the following ratios for Linda’s business
Competitors Average
• Net profit margin 31%
• Gross profit margin 54%
•
• Acid test ratio 1.35x
• Accounts receivable collection period 50 days
• Accounts payable payment period 72 days
income statement
revenue from operation | 3900 |
otherincome rent received | 500 |
total | 4400 |
less purchases returns | 2350 |
changes in stock (opening -closing stock ) | -250 |
repairs | 80 |
wages | 820 |
rent paid | 1000 |
statement of finance position
linda capital 14600 | van a/c | 3000 | |
+profit 400 | 15000 | laptop | 1000 |
cash | 7120 | ||
closing stock | 250 | ||
bank | 3080 | ||
trade receivables fred | 400 | ||
trade payable - toy ltd | 2350 | car | 2500 |
17350 | 17350 |
ii. Assuming Linda’s competitor’s ratio averages are as stated above: Analyse her performance
with reference to each of the ratios calculated in comparison to those of her
competitor
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
College Accounting, Chapters 1-27 (New in Account…
Accounting
ISBN:
9781305666160
Author:
James A. Heintz, Robert W. Parry
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
College Accounting, Chapters 1-27 (New in Account…
Accounting
ISBN:
9781305666160
Author:
James A. Heintz, Robert W. Parry
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning