The income statement for the Clark Company for the two years ending 30 June 2014 and 30
Question:
The income statement for the Clark Company for the two years ending 30 June 2014 and 30 June 2015 are as follows:
Siphon Company
Income statement for the years ended 30 June 2014 and 2015
Items | 2014 $ | 2015 $ |
Sales Cost of sales Gross Profit Interest expense Other operating expenses Net Profit | 450,000 247,500 202,500 7,800 113,700 81,000 | 520,000 296,400 223,600 11,200 111,000 101400 |
Loan amount | $120000 | $160,000 |
The following amounts were extracted from Clark Company's balance sheet at 30 June 2014 and 30 June 2015.
Items | 2014 $ | 2015 $ |
Accounts receivable Prepaid expenses Cash Inventory Bank overdraft Accounts payable Accrued Expenses | 54,000 6,500 8,500 37,500 8,500 42,000 3,500 | 49,400 5,100 7,800 52,000 0 45,200 4,300 |
A. Calculate the following ratios for the years ended 30 June 2014 and 30 June 2015 for Siphon Company, which makes all sales on credit. The balances in the accounts receivable and inventory accounts at 30 June 2013 were $50,000, and $40,500 respectively.
i. gross profit margin
ii. net profit margin
iii. current ratio
iv. quick ratio
v. accounts receivable turnover (times and in days) and
vi. inventory turnover (times and in days).
vii. the operating cycle in days
B. Comment on the profitability of the business using the ratios calculated in part A of the question.
Introductory Financial Accounting for Business
ISBN: 978-1260299441
1st edition
Authors: Thomas Edmonds, Christopher Edmonds