Calculate the following five ratios for each of the two years: (i) Return on capital employed (ii) Net profit margin (iii) Current ratio
Calculate the following five ratios for each of the two years: (i) Return on capital employed (ii) Net profit margin (iii) Current ratio
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 28CE: Inventory Errors McLelland Inc. reported net income of $175,000 for 2019 and $210,000 for 2020....
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Question
Calculate the following five ratios for each of the two years:
(i) Return on capital employed
(ii) Net profit margin
(iii)
(iv) Average Receivable days/ Debtors collection period
(v) Average Payable days/ Creditors collection period
Transcribed Image Text:As at year to 31 Dec.
2018
As at year to 31 Dec.
2019
Statement of financial position
£000
£000
£000
£000
Non-current assets
2,955
6,000
Current assets
750
1200
450
Inventory
Receivables - trade
900
Prepayments
Cash
90
105
2,070
8,070
75
1,515
15
4,470
Issued share capital
Share premium account
Retained earnings
900
900
300
300
1,650
2,850
1,125
2,325
on-current liabilities
10% loan notes
Current liabilities
1,500
3,000
Payables – trade
Accruals
2,100
120
570
75
645
2,220
4,470
8,070
11:32
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4) ENG
28/04/202
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For the year ended
31 Dec. 2018
For the year ended
31 Dec. 2019
£000
£000
£000
£000
Sales revenue
4,800
6,000
Cost of sales
450
Opening inventory
Purchases
1,200
2,700
4,800
5,250
(900)
3,900
(4,350)
Less: Closing inventory
Gross profit
Operating expenses
Finance cost
(450)
(3,450)
1,350
(600)
(150)
1,650
(675)
(300)
Net profit
600
675
As at year to 31 Dec.
2018
As at year to 31 Dec.
2019
Statement of financial position
£000
6,000
£000
£000
£000
Non-current assets
2,955
Current assets
450
Inventory
Receivables – trade
900
90
750
1200
105
Prepayments
Cash
1,515
4,470
2,070
8,070
75
15
Issued share capital
Share premium account
900
900
300
300
11:
28/04
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N
) ENG
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