Calculate the gross profit margin and net profit margin, Financial Accounting

Assets                                                       2011                                                                        2010

Non Current Assets                         4 800 000                                                       3 300 000

Inventory                                       500 000                                                         700 000

Receivables                                    350 000                                                          420 000

Cash                                             280 000                                                          140 000

                                                              5 930 000                                                                    4 560 000

Equity and Liabilities

Share Capital (R2 shares)               2 600 000                                                                1 700 000

Retained Income                            500 000                                                                     440 000

Long term Debt                              2 000 000                                                                   1 800 000

Payables                                        830 000                                                                     620 000

                                                              5 930 000                                                                                    4 560 000

Their abbreviated Income Statement for the year ended 2011:

Sales (75% on credit)             2 400 000

Cost of sales                          1 600 000

Depreciation                              80 000

Interest expense                         90 000

Tax (30%)                                 160 000

Net Income after Tax                 300 000

Dividends                                  240 000

Retained Income                         60 000

NB: Company X is a wine retailer. Their shares are currently trading at $3 per share.

Required

1.1. Calculate the gross profit margin and their net profit margin.

1.2. Calculate the EPS and DPS for the current year. Explain what occurs to the difference between the EPS and the DPS value, from an accounting perspective. 

1.3. Calculate the return on equity. Will shareholders be happy with this return? Explain.

1.4. Calculate and comment on the acid test ratio for both years.

1.5. Calculate and comment on the debt equity ratio for both years.

1.6. Calculate the stock turnover rate and explain the meaning of this ratio.

1.7. What is the period for which they have stock on hand? Is this acceptable? Explain.

Posted Date: 3/19/2013 5:46:14 AM | Location : United States







Related Discussions:- Calculate the gross profit margin and net profit margin, Assignment Help, Ask Question on Calculate the gross profit margin and net profit margin, Get Answer, Expert's Help, Calculate the gross profit margin and net profit margin Discussions

Write discussion on Calculate the gross profit margin and net profit margin
Your posts are moderated
Related Questions
DISCLAIMER OF ONEROUS PROPERTY 1) Effect of disclaimer The trustee may disclaim onerous property consisting of: Land burdened with onerous covenants; Stocks and shares;

PVA ∞ = A(1 + k) -1 +  A(1 + k) -2 +..... + A(1 + k ) ∞ + 1 + A (1 + k) ∞ Multiplying both the sides of Eq (a7) by (1+k) provides: PVA ∞  = (1 +k) = A(1 +k) +A (1 +k)

Can I send you my homework?

The balance sheet and income statement for Bingle Ltd is presented to you as follows: Balance Sheet Extract as at 30 June 2012 with comparatives

r u working on my homework

Q. Illustrate Accounting ramifications? Accounting ramifications i) Restatement ii) Unable to file on timely basis while go back and determine what periods are effected

During construction of a building, the cost of interest on a construction loan should be charged to an expense account

ARG Co presently has $50m of fixed assets and long-term debt of $10m. The issue of $3m of 9% debentures will raise fixed assets by $2m of buildings and machinery. There appears to

A company that uses the perpetual inventory system purchased $8,500 worth of inventory on September 25. Terms of the purchase were 2/10, n/30. The invoice was paid in full on Octob

Q. Show danger of high financial gearing? A additional danger of high financial gearing is that a company may move into a loss-making position as a result of high interest paym