Waite runs a small antiques shop in Chichester. He has provided extracts from two years’ final accounts. He would like you to analyse the accounts to assess the profitability of the firm. The balance sheet extracts are as follows:

(a) Calculate for both years the following ratios:
i. return on capital employed;
ii. gross profit percentage;
iii. net profit percentage.

(b) Using your results from (a), analyse the profitability of the shop.

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Sales Cost of goods sold Gross profit Overheads Net profit Capital employed 2018 31,234 17,970 13,264 6,456 6,808 90,940 2019 38,770 23,133 15,637 10,801 4,836 102,013