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Question 2 Ratio Analysis 30 marks Calculate and analyse the following ratios and percentages for Frames Ltd: Current ratio Acid Test Total Debt to Total

Question 2 Ratio Analysis 30 marks

  1. Calculate and analyse the following ratios and percentages for Frames Ltd:
  1. Current ratio
  2. Acid Test
  3. Total Debt to Total Assets ratio
  4. Return on Total Assets percentage
  5. Net Profit percentage
  6. Equity ratio
  7. Gross Profit percentage
  8. Total Expenses percentage
  9. Inventory Turnover

10. Accounts Receivable Turnover

The following information for the year ended 31 March 2021, has been taken from the accounts of Frames Ltd., an aluminum glass frame business in Takapuna, Auckland.

Revenue and Expenses

31 March 2021

$

Net Sales

120,000

Cost of Sales

65,000

Expenses

10,500

Net Profit before income tax

44,500

Income Tax Expense (28%)

12,460

Net Profit after tax

32,040

Assets, Liabilities and Equity

Cash at Bank

50,000

Accounts Receivable

20,000

Inventory

50,000

Land and Buildings

350,000

Plant and Machinery

120,000

Loan from Bank of New Zealand

100,000

Delivery Vehicle

60,000

Accounts Payable

40,000

Shareholders Equity including the Net Profit $32,040

810,000

Additional Information:

Inventory for the year ended 31 March 2020 = $40,000

Accounts Receivable for the year ended 31 March 2020 = $ 32,000.

10 x 3 marks each; total 30 marks

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