Professional Documents
Culture Documents
Accounting Ratios
Accounting Ratios
Principles of Accounts
Accounting Ratios
Activity 1 :
$ $ $
Revenue 240000
Opening inventory 16000
Purchases 178000
194000
Closing inventory (14000)
Cost of sales 180000
Gross profit 60000
Less : General expenses 9000
Wages 10000 (19000)
Net profit 41000
Calculate the following ratios:
Activity 2:
$ $
Revenue 400000
Opening inventory 27000
Purchases 296000
323000
Less Closing inventory (23000)
Cost of Sales (300000)
Gross profit 100000
Less : General expenses 9000
Rent 17000
Salaries 44000 (70000)
Net profit 30000
A business had credit sales of $372000 and credit purchases of $300000 for
the year ended 31 December 2018.Its statement of financial position
(balance sheet) was as follows:
$ $ $
Non - Current Assets 350000 125000 225000
Current Assets
Inventory 15000
Accounts Receivable 30000
Prepayments 3000
Cash at bank 2000
50000
Less: Current Liabilities
Accounts Payable 26000
Accruals 4000 (30000)
WORKING CAPITAL 20000
245000
Financed By:
Opening Capital 225000
Add Net Profit 60000
285000
Less Drawings (40000)
245000
Calculate the following ratios:
a) Current ratio
b) Acid test ratio
c) Return on investment
d) Receivables collection period
e) Payables payment period
Activity 4 :
The following statement of financial position was prepared for the business
owned by Jackie Davis at the end of its financial year. The business had
credit sales of $224000 and credit purchases of $154000 for the year ended
31 December 2018.
Jackie Davis
Balance sheet as at 31 December 2018
$ $ $
Current Assets
Inventory 17000
Prepayments 1000
36000
306000
Financed By:
343000
306000
a) Current ratio
b) Acid test ratio
c) Return on investment
d) Receivables collection period
e) Payables payment period