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
The city of Fredericton operates automobile parking facilities and is evaluating a proposal to erect and operate a structure for parking in the city's downtown area. 2 designs for

Management and operational control: Cost of goods sold and gross margin analysis, profit as net income analysis, operating expense analysis, contribution analysis and analysis of

Comprehensive Basis of Accounting (OCBOA) - Consistent accounting basis other than GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) used for financial reporting. Illustrations compr

Problem: (a) Many businesses find it useful to maintain a control account in respect of both their trade receivables and trade payables. Describe why such control accounts ar

Define the term- How are businesses organised Nearly all businesses which involve more than a few owners and/or employees are set up as limited companies. This means that finan

Q. Explain Forward loading with example? Terms may involve option to be issued with price to be determined based upon lowest price as of the issue date or for the subsequent 30

The three certainties A trust will be valid only if the three certainties are present i.e. certainty of words, certainty of subject, and certainty of objects.   1. Certainty

Proposals A, B, C, D, E, and F are being considered with money flows over 10 years. Proposal (A and D) are mutually exclusive, (C and F) are also mutually exclusive, and pr

Financial ratios have been categorized in a variety of manners. You may determine the subsequent broad bases having been utilized in current literature:  Primacy Criterion: Th

In February, one of Team Shirts' best customers went bankrupt owing team shirts $85. Team shirts uses the sales method for estimating bad debts. February sales were $15,000. The ac