Mosca and Vespa are two sole traders with the financial statements (in euros) for the year ending 31 December as set out in Figure 7.10.

Using the information contained in the financial statements, and assuming opening and closing inventories are the same, calculate the following ratios and comment on the results of your analysis:
(i) return on capital employed;
(ii) gross profit margin;
(iii) current ratio;
(iv) inventory turnover period;
(v) debtors collection period;
(vi) creditors payment period.

Transcribed Image Text:

Figure 7.10 Financial statements for Mosca and Vespa Mosca Vespa Income Statement Sales 144,000 140,000 Cost of goods sold 120,000 120,000 24,000 20,000 Selling expenses 7,000 10,000 Administration expenses 3,000 6,000 10,000 16,000 Net profit 14,000 4,000 Balance Sheet Fixed assets 54,000 30,000 Current assets Inventory 20,000 10,000 Debtors 30,000 50,000 Cash 10,000 5,000 60,000 65,000 less Creditors 24,000 5,000 90,000 90,000 Capital 90,000 90,000