You are to study the following financial statements for two similar types of retail store and then
Question:
You are to study the following financial statements for two similar types of retail store and then answer the questions which follow.
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(a) Calculate the following ratios:
(i) gross profit as percentage of sales;
(vi) current ratio;
(ii) net profit as percentage of sales;
(vii) acid test ratio;
(iii) expenses as percentage of sales;
(viii) debtor:sales ratio;
(iv) stockturn;
(ix) creditor:purchases ratio.
(v) rate of return of net profit on capital employed (use the average of the capital account for this purpose);
(b) Drawing upon all your knowledge of accounting, comment upon the differences and similarities of the accounting ratios for \(A\) and \(B\). Which business seems to be the most efficient? Give possible reasons.
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