QUESTION 4

Required

1. Calculate the following ratios:

1. Gross profit margin
2. Operating profit margin
3. Current ratio
4. Acid test ratio
5. Inventory days
6. Trade receivable days
7. Trade payable days

The following and the summarised financial statements for two similar retail stores, Carp Ltd and River Ltd, both selling children's scooters. Extract of Income Statements for the year ended 30 June 2019 Carp Ltd River Ltd Sales 80,000 120,000 Cost of Sales 60,000 96,000 Gross Profit 20,000 24,000 Administration Costs 1,000 3,000 Distribution Costs 9,000 6,000 10,000 9,000 Operating Profit 10.000 15,000 +atements of Financial Position as at 30 June 2019 Carp Ltd River Ltd 2,000 14,000 ASSETS Non-Current Assets: Equipment Current Assets: Inventories Trade receivables Bank 15,000 25,000 5,000 17,500 20,000 2,500 45,000 47,000 40,000 54,000 5,000 10,000 EQUITY AND LIABILITIES Current Liabilities: Trade payables Equity: Ordinary 1 shares Share premium Retained profits 25,000 5,000 12,000 20,000 8,000 16,000 42,000 47,000 44,000 54,000