question archive From the data below needs to be done P&L Account Opening Stock - £800,000 Depreciation - £80,000 Advertising expenses - £60,000 Rent - £15,000 Salaries - £56,000 Commission - £5,000 Other expenses - £7,000 Closing Stock - £200,000 Sales - £1,000,000 From the data below please create a Balance Sheet with the appropriate sections including Fixed Assets, Current Assets, Other Assets, Long Term Liabilities, short term liabilities and Equity
From the data below needs to be done P&L Account Opening Stock - £800,000 Depreciation - £80,000 Advertising expenses - £60,000 Rent - £15,000 Salaries - £56,000 Commission - £5,000 Other expenses - £7,000 Closing Stock - £200,000 Sales - £1,000,000 From the data below please create a Balance Sheet with the appropriate sections including Fixed Assets, Current Assets, Other Assets, Long Term Liabilities, short term liabilities and Equity
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From the data below needs to be done P&L Account
Opening Stock - £800,000
Depreciation - £80,000
Advertising expenses - £60,000
Rent - £15,000
Salaries - £56,000
Commission - £5,000
Other expenses - £7,000
Closing Stock - £200,000
Sales - £1,000,000
From the data below please create a Balance Sheet with the appropriate sections including Fixed Assets, Current Assets, Other Assets, Long Term Liabilities, short term liabilities and Equity.
Land - £ 24,300
Equipment - £45,000
Intangible asset - £3,700
Accounts Payable - £30,000
Notes Payable - £10,000
Building and Improvements - £250,000
Account Expenses - £7,000
Additional Paid in capital - £20,000
Common Stock - £10,000
Long term Liabilities - £200,000
Inventory - £15,000
Investments - £14,000
Retained Earnings - £195,000
Cash and cash - £100,000
Accounts receivable - £20,000
Using your P&L account and Balance sheet above and calculate:
- Gross Profit margin
- Gross Profit Percentage margin
- Net Profit margin
- Net Profit Percentage margin
- Current Ratio
- Acid Test
- ROCE
In addition to these calculations, please make analysis and interpretations of the data determined.
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| Sales | 1,000,000 | ||
| Cogs | - 600,000 | [opening stock - closing stock] | |
| Gross profit | 400,000 | ||
| Gross profit percentage = 40% | [Gross Profit/Sales] | ||
| Less: Expenses | |||
| Depreciation | - 80,000 | ||
| Advertising | - 60,000 | ||
| Rent | - 15,000 | ||
| Salaries | - 56,000 | ||
| Commissions | - 5,000 | ||
| Other Expenses | - 7,000 | ||
| Net Profit | 177,000 | ||
| Net profit percentage | 17.70% | [Net profit/Sales] | |
| Current Ratio | Current Asset =149,000 | |
| Current Liabilities = 47,000 | ||
| Current Ratio | 3.17 [149,000/47,000] | |
| Acid Test | Quick asset = 134,000 | |
| Current liabilities=47,000 | ||
| Acid Test Ratio | 2.85 [134,000/47,000] | |
| ROCE | EBIT[Earnings before interests and taxes]/Capital Employed |
| 41.64% [ 177,000/425,000] |
Step-by-step explanation
Current Assets : Inventory 15,000 + Investments 14,000 + Cash and Cash Equivalents 100,000 + Accounts receivable 20,000 [Please note that I assume that Investments are a short term investment, if the problem says otherwise, put it on the Noncurrent Assets]
Quick Asset: Investments 14,000 + Cash and Cash Equivalents 100,000 + Accounts receivable 20,000 [Remove the non liquid asset which is the inventory, liquid assets are cash, receivable, short term investments and marketable securities]
Current Liabilitiy : Accounts Payable 30,000 + Notes Payable 10,000 + Account expenses 7,000 [I assumed accounts expenses is your accrual account, if this is not an accrual account please remove this one. Since the problem is vague, i assume this is accrual account. Should be correct since if I follow the formula on Capital Employed, we get the same answer.]
There are 2 ways to get the CAPITAL EMPLOYED
| 1. ) Capital Employed = Total Asset - Current liabilities | ||
| 2. )Capital employed = Total Shareholders Equity + Long term liabilities | ||
| Checking | Total Asset | 472,000 |
| Current Liabilities | -47,000 | |
| Capital Employed | 425,000 | |
| Checking | Total Shareholders Equity | 225,000 |
| Long term liabilities | 200,000 | |
| Capital Employed | 425,000 | |
Total Asset : Add the current asset we got earlier, then add the Land 24,300 + Equipment 45,000 + Intangible Asset 3,700 + Building and improvements 250,000
Total Shareholders Equity: Additional Paid in Capital 20,000 + Common Stock 10,000 + Retained Earnings 195,000
As you can see, even if we used different formulas we still come up with the same answer which is 425,000.
PLEASE NOTE:
Im kinda confused about the Gross profit margin , gross profit percentage margin, net profit margin and net profit percentage margin. These terms are synonymous with each other, maybe the problem is referring to the numbers [gross profit margin and net profit margin] and not the percentages.
