The summarised accounts of Hope (Eternal Springs) Ltd for the years 20X8 and 20X9 are given below.

Question:

Stock at 1 January 20X8 was £50,000.

Required:

(a) Calculate the following ratios for 20X8 and 20X9:

(i) Gross profit: Sales

(ii) Stock turnover

(iii) Net profit: Sales

(iv) Quick (‘acid test’)

(v) Working capital

(vi) Net profit: Capital employed

(b) State the possible reasons for and significance of any changes in the ratios shown by your calculations.

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Frank Woods Business Accounting Volume 1

ISBN: 9780273681496

10th Edition

Authors: Frank Wood, Alan Sangster

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Question Posted: Aug 20, 2023 01:18 AM

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The summarised accounts of Hope (Eternal Springs) Ltd for the years 20X8 and 20X9 are given below.

Question:

Trading and Profit and Loss Accounts for the year ended 31 December 20X8 Sales Less Cost of sales Gross profit Less Administration expenses Debenture interest Net profit £000 38 = £000 200 (150) 50 (38) 12 £000 46 4 20X9 £000 280 (210) 70 (50) 20

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The ratios for both years and discuss their possible reasons and significance a Calculating Ratios i Gross Profit Margin Gross Profit Margin Gross Pro...View the full answer

Frank Woods Business Accounting Volume 1

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