b. Assuming Anne's competitor's ratio averages are as stated above for month October of years 2019, 2020 and 2021: Analyse her performance with reference to the ratios of October 2021 calculated in comparison to those of her competitor. Also, briefly explain the impact of Covid -19 outbreak on the average ratios (Maximum of 500 words).
b. Assuming Anne's competitor's ratio averages are as stated above for month October of years 2019, 2020 and 2021: Analyse her performance with reference to the ratios of October 2021 calculated in comparison to those of her competitor. Also, briefly explain the impact of Covid -19 outbreak on the average ratios (Maximum of 500 words).
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter5: Sales And Receivables
Section: Chapter Questions
Problem 87BPSB
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Please answer only to question b) ( but please, don't copy from any other answer , I would like to hear new anlysis)
Ratios calculations and Financial statements are below:
Anne's business for October 2021
- Net profit Margin = net profit/sales = (210)/5600 = - 3.75%
- Gross profit margin = gross profit/sales = 770/5600 = 13.75%
- Current ratio= current assets/current liability= 15,840/5,150= 3.08
- Acid test ratio = (cash+ accounts receivable) / current liability = (7,340+8030+150)/5,150 = 3.02
- Accounts receivable collection period = Receivables / Average daily credit sales = 150/ (5600/360 days) = 9.64 days or 10 days
- Accounts payable payment period = Accounts Payable / Average daily purchases = (5,150/ (5,150/360 days) = 360 days
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