The information below is from the accounts of John Parry, a sole trader.

All of John Parry’s sales and purchases are on credit.

Required:

Calculate the following profitability and efficiency ratios:

(a) Return on capital employed

(b) Gross profit ratio

(c) Net profit ratio

(d) Trade receivables collection period

(e) Trade payables collection period

(f) Inventory turnover ratio (g) Asset turnover ratio.

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Income Statement for the Year Ended 31 December 2012 Revenue 150,000 Less Cost of Sales Opening inventory 25,000 Add Purchases 75,000 100,000 Less Closing inventory 30,000 70,000 Gross Profit 80,000 Less Expenses 30,000 Net Profit 50,000 Other information 31.12.2011 31.12.2012 Total assets 50,000 60,000 Closing equity 300,000 500,000 Trade receivables 18,000 19,000 Trade payables 9,000 10,000