Details $ Fixed Assets 11,500,000 Gross profit 14,000,000 Accounts receivable 3,500,000 Stock, January 1, 2020 5,000,000 Operating expenses 6,000,000 Accounts payable 2,000,000 Net purchases...

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Details
$
Fixed Assets
11,500,000
Gross profit
14,000,000
Accounts receivable
3,500,000
Stock, January 1, 2020
5,000,000
Operating expenses
6,000,000
Accounts payable
2,000,000
Net purchases
12,000,000
Net sales
24,000,000
Cash at bank & in hand
7,500,000
Cost of sales
10,000,000
Stock, December 31, 2020
7,000,000
Net profit
8,000,000
DQ2- Your are required to answer all three (3 ) questions below
The following information was extracted from the books of Bogart Ltd for the financial year ending December 31, 2020:
1. State the formulae for the following ratios and calculate the ratios using the information from the financial statement extract above.
(a) Gross profit percentage
(b) Net profit percentage
(c) Current ratio
(d) Liquid ratio
(e) Average stock
(f) Inventory turnover
(g) Working capital
(h) Debtors collection period
2. Explain the purpose of the liquidity ratio and state two ratios that may be use to measures the liquidity of a company.
3. Explain the purpose of the profitability ratio and state two ratios that may be use to measures the profitability of a company.
Answered Same DayJul 25, 2022

Answer To: Details $ Fixed Assets 11,500,000 Gross profit 14,000,000 Accounts receivable 3,500,000 Stock,...

Nitish Lath answered on Jul 26 2022
24 Votes
1. Ratios calculations
    Ratio name
    Formula
    Figures
    Ratio
    Gross profit percentage
    Gross pr
ofit
     14,000,000
    58.33%
     
    Net sales
     24,000,000
     
     
     
     
     
    Net profit percentage
    Net profit
     8,000,000
    33.33%
     
    Net sales
     24,000,000
     
     
     
     
     
    Cu
ent ratio
    Cu
ent assets
     18,000,000
     9.00
     
    Cu
ent liabilities
     2,000,000
     
     
     
     
     
    Liquid ratio
    Liquid assets
     11,000,000
     5.50
     
    Cu
ent liabilities
     2,000,000
     
     
     
     
     
    Average stock
    (Opening stock+ Closing stock) /2
     (5,000,000 +
     6,000,000
     
    
     7,000,000)/2
     
     
     
     
     
    Inventory turnove
    Cost of sales
     10,000,000
     1.67
     
    Average inventory
     6,000,000
     
     
     
     
     
    Working...
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