Question 2

From the following annual accounts of ABC Ltd, you are required to calculate the following ratios and comment on the results, indicating what other information you may require:

1. Gross profit percentage,
2. Net profit percentage,
3. Return on total assets,
4. Quick asset ratio,
5. Debtors collection period,
6. Stock turnover,
7. Fixed assets turnover,
8. Return on shareholders funds,
9. Current ratio, and
10. Debt ratio.

Balance Sheet as at 31 December 2020

	Rs.
Share Capital	450
Retained Profit	240
	690
12% Debentures	700
Trade Creditors	620
Proposed Dividend	45
	2,055
Fixed Assets net of depreciation	875
Stocks	310
Debtors	100
Bank Balance	100
Extract from Profit & Loss Account	2,055
	Rs.
Sales for the year	3,100,000
Gross Profit	1,725,000
Expenses	805,000
Depreciation	250,000