The summarized balance sheets of company R at the end of two consecutive financial years were as shown in Figure 7.9.

Sales were €541,000 and €675,000 for the years ended 31 March 20X2 and 20X3, respectively. Corresponding figures for cost of sales were €369,000 and €481,000, respectively. At 31 March 20X1, reserves had totalled €21,000. Ordinary share capital was the same throughout.

Calculate the following ratios for both years and comment briefly on the results:
(i) Gross profit/Sales;
(ii) Net profit/Sales;
(iii) Sales/Net assets;
(iv) Net profit/Net assets;
(v) Current assets/Current liabilities;
(vi) Quick assets/Current liabilities.

Transcribed Image Text:

Figure 7.9 R's summarized balance sheets as at 31 March (000) 20X2 50 115 42 Non-current assets (at written down values) Premises Plant and equipment Vehicles 207 Current assets Inventory 188 72 22222 86 49 Receivables and prepayments 53 Bank and cash Current liabilities 20 92 96 303 250 53 303 Payables Accruals Working capital Net assets Financed by Ordinary share capital Reserves Shareholders' funds Loan capital: 7 per cent debentures 303 20X3 48 196 81 325 177 62 30 269 132 30 162 107 432 250 82 332 100 432