4. George has propared the following final accounts for the your ending 31 December 2013. Trading and Profit & Loss Account for the year ended 31 December 2013 $ $ 220,000 Sales Less: Cost of goods sold Stock at 1 January 2013 Add: Purchases 29,600 132.800 162,400 30.400 132.000 88,000 Less: Stock at 31 December 2013 Gross profit Less: Rent Salary Sundry expenses Net Profit 5,000 5,200 3.000 13,200 74.800 Balance Sheet at 31 December 2013 $ $ Fixed assets at net book value Premises 88,000 Vehicles 46.000 134,000 Current assets Stock 30,400 Debtors 27,465 Bank 29.135 87.000 221,000 Capital Bal by Add: Net profit Loss Drawings Current Liabilities Creditors 153,800 74.800 228,600 42,400 186,200 34.800 221.000 REQUIRED (a) Calculate the following ratios for George: Gross profit as a percentage of sales (11) Net Profit as a percentage of sales (11) Rate of stock turnover times) (iv) Return on average capital employed as a percentage (v) Current ratio (working capital ratio) (vi) Liquidity ratio (acid test ratio) (vii) Sales to average capital employed (vill) Average time that goods are carried in stock (months) (ix) Debtors' collection period in days Creditors' settlement period in days Notes Workings must be shown (20 marks) (b) At 31 December 2012, George net profit margin was 38%. Suggest FIVE possible reasons for the decrease in the net profit margin from 2012 to 2013. (5 marks) (Total 25 mark 4. George has prepared the following final accounts for the year ending 31 December 2013. Trading and Profit & Loss Account for the year ended 31 December 2013 220,000 Sales Less: Cost of gods sold Stock at 1 January 2013 Add: Purchases 29,600 132.800 162,400 30.400 132.000 88,000 Less: Stock at 31 December 2013 Gross profit Less: Rent Salary Sundry expenses Net Profit 5,000 5,200 3.000 13.200 74.800 Balance Sheet at 31 December 2013 $ $ Fixed assets at net book value Premises Vehicles 88,000 46.000 134,000 Capital Balb/f Add: Net profit 153,800 74.800 228,600 42.400 186,200 Loss Drawings Current assets Stock Debtors Bank 30,400 27,465 29.135 87.000 221.000 Current Liabilities Creditors 34.800 221.000 REQUIRED (a) Calculate the following ratios for George: (1) Gross profit as a percentage of sales (11) Net Profit as a percentage of sales (iii) Rate of stock turnover (times) Return on average capital employed as a percentage Current ratio (working capital ratio) (vi) Liquidity ratio (sold test ratio) (vii) Sales to average capital employed (vill) Avorage time that goods are carried in stock (months) (ix) Debtors' collection period in days (x) Creditors settlement period in days (20 marks) Note: Workings must be shown (b) At 31 December 2012, George not profit margin was 38%. Suggest FIVE possible reasons (5 marks) for the decrease in the not profit margin from 2012 to 2013. (Total 25 marks) Page for
