You have been given the task of assessing the financial performance of two separate companies operating...

 

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You have been given the task of assessing the financial performance of two separate companies operating in the retail industry. The financial information for these two companies is presented as follows: Company Sales Gross profit Net profit Fixed assets (net book value) Current assets Stock Debtors Bank Current liabilities Creditors Bank overdraft Brady £000 325 125 60 135 70 45 25 55 NIL Simpson £000 380 170 96 200 135 75 NIL 45 40 Required (a) Calculate, for each company, the following ratios (to two decimal places). (i) Gross profit to sales (⁹6) (ii) Net profit to sales (96) (iii) Return on capital employed (%) (iv) Net asset turnover (v) Current ratio (vi) Acid test (quick) ratio (b) Compare the performance of both companies, in terms of profitability and liquidity. You must use the ratios calculated in part (a) and the financial information above to support your answer. You have been given the task of assessing the financial performance of two separate companies operating in the retail industry. The financial information for these two companies is presented as follows: Company Sales Gross profit Net profit Fixed assets (net book value) Current assets Stock Debtors Bank Current liabilities Creditors Bank overdraft Brady £000 325 125 60 135 70 45 25 55 NIL Simpson £000 380 170 96 200 135 75 NIL 45 40 Required (a) Calculate, for each company, the following ratios (to two decimal places). (i) Gross profit to sales (⁹6) (ii) Net profit to sales (96) (iii) Return on capital employed (%) (iv) Net asset turnover (v) Current ratio (vi) Acid test (quick) ratio (b) Compare the performance of both companies, in terms of profitability and liquidity. You must use the ratios calculated in part (a) and the financial information above to support your answer.

Answer rating: 100% (QA)

a Computation snip fx A A69 45 46 47 48 49 50 51 52 ... View the full answer