Question 2 (25 marks) Use the following question to answer a question that follows.

Mr Lesangs Statement of Comprehensive Income for the year ended 30 April 2020

Pula Pula Pula Sales 259,870 Less Sales returns (5,624) Net Sales 254,246 Less cost of goods sold Opening inventory 15,654 Add purchases 135,680 Add carriage inwards 11,830 Less Returns Outwards (13,407) Net purchases 134,103 Cost of goods available for sale 149,757 Less closing inventory (17,750) Cost of goods sold 132,007 Gross profit 122,239 Add other income: Discount received. 1,750 123,989 Less expenses & losses: Allowance for doubtful debts 223 Discounts allowed 2,306 Carriage outwards 4,562 Rent, rates and insurance 25,973 Less prepaid rates (5,435) Less prepaid insurance (1,120) 19,418 Heating and lighting 11,010 Add accrued heating 1,360 12,370 & lighting Postage, stationery and telephone 2,410 Advertising 5,980 Salaries & wages 38,521 Bad debts 2,008

Mr Lesangs Statement of Financial position as at 30 April 2020

Cost Accumulated depreciation Net Book Value Non current assets Fixtures and fittings-at cost 120,740 (63,020) 57,720 Current assets Inventory 17,750 Accounts receivable 24,500 Less provision for doubtful debts (735) 23,765 Bank 4,440 Cash 534 Prepayments1 6,555 53,044 Current liabilities Accounts payable 19,840 Accruals 1,360 (21,200) Working capital 31,844 Total assets 89,564 Financed by: Capital 83,887 Add net profit 24,117 Less drawings (18,440) 89,564

Calculate the following ratios:

a. Gross profit Margin (2.5 marks)

b. Gross profit Mark up (2.5 marks)

c. Stock turnover (2.5 marks)

d. Net profit margin (2.5 marks)

e. Expenses to sales ratio (2.5 marks)

f. Current ratio (2.5 marks)

g. Acid test ratio (2.5 marks)

h. Return on capital employed (2.5 marks)

i. Accounts receivable ratio (2.5 marks)

j. Accounts payable ratio (2.5 marks)