The information that follows has been extracted from the year-end accounts of Jersey's SmallIsle restaurant. Year...

 

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The information that follows has been extracted from the year-end accounts of Jersey's SmallIsle restaurant. Year Accounts receivable Inventory Sales revenue (80% on account) Cost of sales Net profit 20X1 20X2 £15,000 £14,000 23,500 24,000 750,000 785,000 285,000 321,000 31,000 38,000 Required a For 20X1 and 20X2, calculate SmallIsle's: i Average collection period for accounts receivable. ii Inventory turnover b From your answers to part a, comment on SmallIsle's asset turnover trend. c For 20X1 and 20X2, calculate SmallIsle's: i Gross profit margin ii Net profit margin c From your answers to part c, comment on SmallIsle's profit trend. The information that follows has been extracted from the year-end accounts of Jersey's SmallIsle restaurant. Year Accounts receivable Inventory Sales revenue (80% on account) Cost of sales Net profit 20X1 20X2 £15,000 £14,000 23,500 24,000 750,000 785,000 285,000 321,000 31,000 38,000 Required a For 20X1 and 20X2, calculate SmallIsle's: i Average collection period for accounts receivable. ii Inventory turnover b From your answers to part a, comment on SmallIsle's asset turnover trend. c For 20X1 and 20X2, calculate SmallIsle's: i Gross profit margin ii Net profit margin c From your answers to part c, comment on SmallIsle's profit trend.

Answer rating: 100% (QA)

a i ANSWER To calculate the average collection period for accounts receivable we can use the following formula Average Collection Period Accounts Receivable Annual Credit Sales x Number of Days in Yea... View the full answer