The following figures are for AB Engineering Supplies Ltd at 31 December 19X9.

Turnover Gross profit Average stock at cost price Expenses eooo 160 40 10 8

Fixed assets Current assets Stock Debtors Bank Current liabilities Capital 108 10 8

_2 _20 128 10 118 128

(a) Calculate:

(i) gross profit as a percentage of the sales;

(ii) rate of stock turnover;

(iii) net profit as a percentage of sales;

(iv) net profit as a percentage of total capital employed (fixed assets plus current assets);

(v) current ratio;

(vi) quick asset (acid test) ratio.

(b) The following figures are for another firm in the same line of business, CD Engineering Services Ltd, for the year ended 31 December 19X9.

CD Engineering Services Ltd Gross Profit as a percentage of the sales 25%

Rate of stock turnover 9 Net profit as a percentage of sales 10%

Net profit as a percentage of total capital employed 12Vl%

Current ratio 1 : 1 Quick asset (acid test) ratio 0.5 : 1 Compare your results in

(a) with those given for CD Engineering Services Ltd.

As a result of your comparison, say which you think was the more successful business during 19X9, giving your reasons.

(Northern Examining Association: GCSE)