FR – May 2020 – L2 – Q4a – Financial Ratios Calculation

Calculate the financial ratios of Adenta Ltd for the year ended 31 December 2018 based on its financial statements.

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Ratio Basis Computation Answer
1. Return on Capital Employed Profit before interest and taxes * 100 / Capital employed (4,220 * 100) / 12,700 33.23%
2. Gross Profit Margin Gross profit * 100 / Sales (11,100 * 100) / 48,500 22.89%
3. Net Profit (before tax) Margin Net profit (before tax) * 100 / Sales (3,720 * 100) / 48,500 7.67%
4. Current Ratio Current assets : Current liabilities 11,900 : 10,000 1.19:1