Question
You are the Accountant of a business, and it is your responsibility to prepare a monthly financial analysis of the companys performance. This information will
You are the Accountant of a business, and it is your responsibility to prepare a monthly financial analysis of the companys performance.
This information will be used as a guide to plan for the companys future. At the end of December 2022, your Accounts Supervisor presented you with the following information, which was extracted from the Restaurants books:
Details/Accounts | $ |
Net sales | 1,500,000 |
Cost of sales | 900,000 |
Operating expenses | 225,000 |
Stock | 45,000 |
Accounts receivable | 100,000 |
Cash | 80,000 |
Accounts payable | 90,000 |
Calculate the following financial ratios (Round to two decimal places and show workings):
Gross profit percentage. (3 marks)
Net profit percentage. (3 marks)
Current ratio. (3 marks)
Liquid ratio. (3 marks)
Debtors collection period. (4 marks)
Interpret the results that you calculated in part (d) and (e) above. (4 marks)
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