Fai exercise 1
6
The following is a P&L statement of Dr. Foo Manchu’s Pet Store for the financial year 2014. Calculate the relevant ratios on the next page and then interpret the results Dr. Foo Manchu’s Pet Store P&L Statement for the year ended 31 st December 2014 Revenue Sales Less: Sales Return Net Sales Cost of Goods Sold Add: Cost of Goods Sold Freight Inwards Gross Profit Selling Expenses Advertising Sales Wages Promotion Admin. Expenses Insurance Rent Electricity Financial Expenses Interest on Loan Net Profit/(Loss) $ 2960 6460 500 375 3600 560 $ 48510 1100 9920 4535 1750 $ 74000 1030 72970 49610 23360 16205 7155
Transcript of Fai exercise 1
The following is a P&L statement of Dr. Foo Manchu’s Pet Store for the financial year 2014. Calculate the relevant ratios on the next page and then interpret the results
Dr. Foo Manchu’s Pet Store P&L Statement for the year ended 31 st December 2014
RevenueSalesLess: Sales ReturnNet Sales
Cost of Goods SoldAdd: Cost of Goods Sold Freight Inwards
Gross Profit
Selling ExpensesAdvertisingSales WagesPromotion
Admin. ExpensesInsuranceRentElectricity
Financial ExpensesInterest on Loan
Net Profit/(Loss)
$
29606460500
3753600560
$
485101100
9920
4535
1750
$
74000103072970
4961023360
16205
7155
Additional Information1) Total owner’s equity for the years 2013 and 2014 are $30,200 and $35,600 respectively.2) Credit sales for the year 2014 is 50% of net sales.
Profitability Ratios 2013 2014 Interpretation
Return on Equity(ROE) 18.5%
Net Profit Margin (NPM) 6.7%
Gross Profit Margin (GPM) 34%
Selling Exp. Ratio (SER) 16.5%
General Exp. Ratio (GER) 8.8%
Financial Exp. Ratio (FER) 2%
Complete the following calculations and interpret the trends from the 2013-2014 periods.
(Tip: Put a next to ratio experiencing an increase and a next to a decreasing ratio. This is to avoid confusion while interpreting the ratio.)
The following is a Balance Sheet of Dr. Foo Manchu’s Pet Store during the same financial period. Calculate the relevant ratios on the next page and then interpret the results.
Dr. Foo Manchu’s Pet Store Balance Sheet as at 31 st December 2014
Owner’s EquityCapital Add: Net ProfitLess: DrawingsTotal O/E
Represented by:Current Assets DebtorsInventory Prepaid InsuranceAccrued Dividend
Non – Current Assets Land & Office BuildingsLong-Term Govt. Bonds
Total Assets
Current LiabilitiesBank OverdraftCreditorsPrepaid CommissionAccrued Rent
Deferred Liabilities Mortgage
Total Liabilities
Net Assets
$
47603440525150
6200023145
18707050900600
$
8875
85145
10420
48000
$
302007155175535600
94020
58420
35600
Additional Information1) Debtors balance for 2013: 5490; inventory balance for 2013: 3755.
StabilityRatios 2013 2014 Interpretation
Working Capital1.03: 1
Total Debt 80.2%
Stock Turnover29.2 days
Debtor Turnover24.8 days
Interest Coverage 2.5 times
Complete the following calculations.
(Tip: Put a next to ratio experiencing an increase and a next to a decreasing ratio. This is to avoid confusion while interpreting the ratio.)
