1.6. Analysis and communication of accounting information
A subsection of Accounting, 9706, through 1. Financial accounting (AS Level)
Listing 10 of 137 questions
The following is an extract of Chikkadea’s financial statements (final accounts) for the year ended 30 April 2010. Income Statement (Trading and Profit and Loss account) for the year ended 30 April 2010 $ $ Revenue (Sales) 375 000 Less cost of sales: Inventory (Stock) at 1 May 2009 32 000 Ordinary goods purchased (Purchases) 281 250 313 250 Inventory (Stock) at 30 April 2010 28 000 285 250 Gross profit 89 750 Less expenses 44 750 Profit for the year (Net Profit) 45 000 Balance Sheet at 30 April 2010 Assets $ $ Non-current (Fixed) assets 428 000 Current assets Inventory (Stock) 28 000 Trade receivables (Debtors) 22 500 Cash and cash equivalents (Bank) 1 500 52 000 Total assets 480 000 Equity and liabilities Equity: Capital 450 000 Current Liabilities Trade payables (Creditors) 30 000 480 000 The following have been calculated for Dakeeri, a competitor in the same type of business. Gross profit ratio 20.2% Net profit ratio 10% Return on capital employed 9% Return on total assets 8% Current (working capital) ratio 1.5 : 1 Liquid (acid test) ratio 0.7 : 1 Receivable days (Debtors’ turnover) 28 days Payable days (Creditors’ turnover) 35 days Inventory turnover (Rate of stockturn) 8 times REQUIRED Calculate the same ratios for Chikkadea’s business. In order to gain full marks you must show the formula or your workings for each calculation. Where possible show your answers to one decimal place. The first answer has been given as an example. Gross Profit Sales × 100 = 89 750 × 100 375 000 = 23.9% Name the business which performed better during the year ended 30 April 2010. Justify your answer to by comparing four of the ratios which you have calculated with the same four ratios given for Dakeeri.
9706_s10_qp_21
THEORY
2010
Paper 2, Variant 1
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137