The following information is given for Chris Tynan:

Trading account for the year ended 31 March 20*8

Additional information

All purchases and sales were on credit.
The gross margin for the year ended 31 March 20*7 was 35.62%.
The liquid asset ratio at 31 March 20*7 was 0.63:1.
The debtors’ collection period at 31 March 20*7 was 21 days.

Required

Calculate the following ratios:

a) Gross margin
b) Net profit margin
c) Overheads in relation to turnover ratio
d) Return on capital employed
e) Net current asset ratio
f) Liquid capital ratio
g) Debtors’ collection period
h) Creditors’ payment period.

Comment on the results revealed by the gross margin; the liquid capital ratio; and the debtors’ collection period.

Transcribed Image Text:

Sales Less cost of sales Stock 1 April 20*7 Purchases Stock 31 March 20*8 Gross profit Balance sheet at 31 March 20*8 Fixed assets Current assets Stock Trade debtors Current liabilities Trade creditors Bank overdraft Capital Add profit Less drawings £ 42,000 21,000 £ 45,000 368,000 413,000 43,000 43,000 36,000 79,000 63,000 £ 560,000 370,000 190,000 312,000 16,000 328,000 309,000 61,000 370,000 42,000 328,000