Further practice
on Accounting
Ratios
Week 7
Revision on Accounting Ratios –
Types
Accounting Ratios
Profitability
Ratios
Investment
Ratios
Financial
Efficiency
Ratios
Liquidity Ratios
Practice Exercise 1
Threads Limited company (see separate file with the financial
statements)
Practice Exercise 2
Harridges plc company (see separate file with the financial statements)
Practice Exercise 3
Calculate the following ratios:
1. Return on capital employed
2. Net profit margin ratio
3. Gross profit margin ratio
4. Operating profit margin ratio
5. Current ratio
6. Acid-Test ratio
7. Debtors collection period
8. Creditors collection period
Practice Exercise 3
| For the year ended 31 Dec. 2019 |
||
| Sales revenue | 1,800 | |
| Cost of sales | ||
| Opening Inventory | 700 | |
| Purchases | 1,050 | |
| Closing Inventory | (450) | (1300) |
| Gross Profit | 500 | |
| Operating Expenses | (120) | |
| Finance Cost | (80) | |
| Net Profit | 300 |
AssignmentTutorOnline
| For the year ended 31 Dec. 2019 | ||
| Non-current assets | 1,300 | |
| Current assets | ||
| Inventory | 670 | |
| Receivables-Trade | 420 | |
| Cash | 110 | 1,200 |
| 2,500 | ||
| Issued share capital | 350 | |
| Share premium account | 250 | |
| Retained earnings | 300 | |
| 900 | ||
| Non-current liabilities (10% loan notes) |
450 | |
| Current liabilities | ||
| Accruals | 680 | |
| Payables-Trade | 470 | |
| 1600 |
Practice Exercise 3
Calculate the following ratios:
1. Return on capital employed
2. Net profit margin ratio
3. Gross profit margin ratio
4. Operating profit margin ratio
5. Current ratio
6. Acid-Test ratio
7. Debtors collection period
8. Creditors collection period
Solution
1. ROCE =
