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QUESTION 4 (15 MARKS) Hani Khatijah Enterprise commenced a retail store at Subang Jaya. The business commenced on 1 January 2015. The company has the
QUESTION 4 (15 MARKS) Hani Khatijah Enterprise commenced a retail store at Subang Jaya. The business commenced on 1 January 2015. The company has the following financial statements for two similar types of retail store. Statement of Comprehensive Income for the year ended 31/12/2015 B RM RM RM RM Sales 80,000 140,000 Less: Cost of goods sales Opening inventories 25,000 22,500 Add: Purchases 50,000 91.000 75,000 113,500 Less: Closing inventories (15.000) 60.000) 17.500) (96.000 Gross profit 20,000 44,000 Less: Depreciation 1,000 3,000 Other expenses 9.000 (10,000) 6.000 (9,000) Net profit 10.000 35,000 Statement of Financial Position as at 31/12/2015 RM RM RM RM 2,000 20,000 (6.000) 14,000 Fixed Assets Equipment at cost Less: Depreciation to date Current Assets Inventories AC Receivables Bank 10,000 (8,000) 15,000 25,000 5.000 45,000 17,500 20,000 22.500 60,000 Less: Current liabilities AC Payables (5.000) 40,000 42.000 (10.000) 50,000 64,000 Financed by: Capital Balance as start of year Add: Net profit Less: Drawings 38.000 10,000 48,000 (6,000) 42.000 36,000 35,000 71.000 (7,000) 64.000 Required: a Compute the following ratios for both retail stores: 1. Gross profit as percentages of saks ii. Inventories turnover. ii. Current ratio. iv. Debtors/sales ratio (month). (1 marks Drawing upon all your knowledge of accounting, comment upon the differences and similarities of each of the accounting ratios for A and B. Which business to be the most efficient? Give FOUR (4) possible reasons. (4 marks)
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