Exercise Financial Ratio Analysis Below is the trial balance as at 31 March 2007 of Alia who runs a florist. DR (RM) Capital Bank Cash Stock 1 April 2006 Debtors & Creditors Premise Motor Vehicles Return Inwards and Outwards Salaries Water & Electricity General Expenses Commission Received Insurance Purchases & Sales
81,250 10,550 38,000 60,000 130,000 82,500 20,000 120,000 26,000 6,450
CR (RM) 251,900
29,450
4,150
2,500 24,000 179,250 778,000
490,000 778,000
Additional information: 1.
Sto Stock as at 31 March rch 200 2007 7 wa was va value lued at at RM RM25, 25,000 000.
2. Accr Accru ued insu nsuran rance and accru ccrue ed com commiss ission ion rec receiv eived as at 31 March rch 2007 is RM4,000 and RM2,000 respectively. 3.
Industry average: Gross profit ratio Net profit ratio Current ratio Acid test ratio Stock turnover ratio
30% 15% 2.5% 1.5% 8 times.
Required: a.
Calculate the following ratios for the business: i. ii. iii. iii. iv. iv. v.
Gross ross Pro Profit fit Ratio tio Net Net Pro Profi fitt Ra Ratio tio Curr Curren entt Rat Ratio io Acid Acid Test Test Rati Ratio o Stoc Stock k Tur Turn nover over Rati Ratio o (12 marks)
b.
Compare and comment your findings with industry average. (5 marks)
c.
If ev everything re remained un unchanged, bu but, co cost of of go goods so sold in increased by by 15 15%, ca calculate th the percentage of increase or decrease on net profit ratio of the business. (3 marks) (Total: 20 marks)
