Question Tag: Gross Profit Margin

Search 500 + past questions and counting.

  • Filter by Professional Bodies

  • Filter by Subject

  • Filter by Series

  • Filter by Topics

  • Filter by Levels

  • 20 Marks

FRPA – APRIL 2023 – L3 – Q4 – Ratio Analysis and Performance Report for Loan Assessment

Compute five specified ratios for 2021 and 2020 using provided financial statements and write a report analyzing the company's performance comparing the two years.

As the Credit Officer for TCB Bank, Alpha Technology Solutions Limited has submitted its financial statements as part of the process to secure a loan of GHS 5million. You are required to:
i. Compute the following ratios for 2021 and 2020.
• Gross Profit Margin
• Return on Capital Employed
• Acid Test Ratio
• Payable period
• Debt to equity

ii. Write a report to the Head of Credit analyzing the performance of the company for the 2020 and 2021. Your report should explain the ratios and analyze them in relation to the previous year.

ALPHA TECHNOLOGY SOLUTIONS LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31ST DECEMBER 2021

2021 (GHS) 2020 (GHS)
NON-CURRENT ASSETS
Property, Plant and Equipment 438,631 428,210
Fixed Deposit – 400,000
Total Non-Current Assets 438,631 828,210
CURRENT ASSETS
Inventories 2,284,401 2,409,650
Accounts Receivable 2,712,529 1,368,010
Cash on Hand and Bank 642,951 2,177,519
Total Current Assets 5,639,881 5,955,179
TOTAL ASSETS 6,078,512 6,783,389
2021 (GHS) 2020 (GHS)
LIABILITIES AND SHAREHOLDERS’ EQUITY
NON-CURRENT LIABILITIES
Loans 115,484 115,484
Deferred Tax 18,127 22,110
Total Non-Current Liabilities 133,611 137,594
CURRENT LIABILITIES
Accounts Payable 1,843,574 2,869,489
Current Tax 30,512 129,464
Total Current Liabilities 1,874,086 2,998,953
Total Liabilities 2,007,697 3,136,547
SHAREHOLDERS’ EQUITY
Stated Capital 1,240,000 1,240,000
Retained Earnings 2,830,815 2,406,842
Total Shareholders’ Equity 4,070,815 3,646,842
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 6,078,512 6,783,389

ALPHA TECHNOLOGY SOLUTIONS LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31ST DECEMBER 2021

2021 (GHS) 2020 (GHS)
Revenue 11,180,208 12,957,649
Direct Cost (7,446,676) (9,703,650)
Gross Profit 3,733,532 3,253,999
Other Income – 23,436
Administrative Expenses (3,168,234) (2,483,480)
Operating Profit 565,298 793,955
Income Tax Expense (141,325) (198,489)
Profit/(Loss) After Taxation 423,973 595,466

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FRPA – APRIL 2023 – L3 – Q4 – Ratio Analysis and Performance Report for Loan Assessment"

  • 20 Marks

ITA – APR 2023 – L1 – Q5 – Accounting Ratios Computation

Compute specified accounting ratios for 2020 and 2021 using the provided financial statements for Lynmed Pharmacy Limited.

As a Loan officer for HBF Bank, you have received the below listed financial statements from a pharmacist requesting for a loan of GH$100,000,00. Using the financial statement presented below, compute the following accounting ratios for the years 2020 and 2021. a. Gross profit/(loss) margin b. Current Ratio c. Acid Test Ratio d. Debt to equity ratio e. Inventory period (Total: 20 marks)

LYNMED PHARMACY LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31. DECEMBER 2021

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES Account Payable Taxation Total Liabilities SHAREHOLDERS’ EQUITY Stated Capital Shareholders Account Income Surplus Total Shareholders’ Equity TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

65,447 118,58

65,447 118,58

(Note: OCR is repeated and garbled; figures appear as 65,447 and 118,58 for different lines/years, but incomplete. Assuming for model: two years’ data, e.g., 2020: Accounts Payable 65,447, Taxation 118,58? But clearly OCR error, perhaps 65,447 for 2020 Payable, 118,580 for Taxation or something. Income statement not provided. For answer, I’ll assume typical figures or note incompleteness.)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "ITA – APR 2023 – L1 – Q5 – Accounting Ratios Computation"

  • 1 Marks

FA – Nov 2012 – L1 – SA – Q11 – Sale of Goods

Calculating the commission based on gross sales.

Apple Foods Limited sells goods supplied by Gold Foods Plc at a fixed price calculated to give a gross profit margin of 50%. Apple Foods, being an agent, receives a commission of 12.5% of the gross sales made by it. During the period ending 31 October 2012, Apple Foods sold goods costing N184,000. The commission receivable by Apple Foods will be:

A. N4,600
B. N23,000
C. N46,000
D. N184,000
E. N368,000

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Nov 2012 – L1 – SA – Q11 – Sale of Goods"

  • 20 Marks

FR – Nov 2015 – L2 – Q3 – Preparation of Financial Statements, Financial Statement Analysis

This question requires preparing a cash flow statement for CL Ltd using IAS 7 and calculating the gross profit margin based on changes in purchase and selling prices.

(a) CL Ltd is a wholesaler and retailer of office furniture. Extracts from the company’s financial statements are set out below:

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED:

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2015:

Description Stated Capital Capital Surplus Income Surplus Total
Balances b/f 8,500 2,500 15,800 26,800
Share issue 12,900 – – 12,900
Comprehensive income – 5,000 7,000 12,000
Dividends paid – – (4,000) (4,000)
Balances c/f 21,400 7,500 18,800 47,700

STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH:

Note:
Non-current assets
During the year, the company redesigned its display areas in all of its outlets. The previous displays had cost GHS10 million and had been written down by GHS9 million. There was an unexpected cost of GHS500,000 for the removal and disposal of the old display areas. Also, during the year, the company revalued the carrying amount of its property upwards by GHS5 million, and the accumulated depreciation on these properties of GHS2 million was reset to zero.
All depreciation is charged to operating expenses.

Required:
Prepare a statement of cash flows for CL Ltd for the year ended 31 March 2015 in accordance with IAS 7 – Statement of Cash Flows. (15 marks)

(b) The directors of CL Ltd are concerned at the deterioration in its bank balance and are surprised that the amount of gross profit has not increased for the year ended 31 March 2015. At the beginning of the current accounting period (i.e. on 1 April 2014), the company changed to importing its purchases from a foreign supplier because the trade prices quoted by the new supplier were consistently 10% below those of its previous supplier. However, the new supplier offered a shorter period of credit than the previous supplier (all purchases are on credit). In order to encourage higher sales, CL Ltd increased its credit period to its customers, and some of the cost savings (on trade purchases) were passed on to customers by reducing selling prices on both cash and credit sales by 5% across all products.

Required:
(i) Calculate the gross profit margin that you would have expected CL Ltd to achieve for the year ended 31 March 2015 based on the selling and purchase price changes described by the directors. (2 marks)

(ii) Comment on the directors’ surprise at the unchanged gross profit and suggest what other factors may have affected gross profit for the year ended 31 March 2015.

(3 marks)
(Total: 20 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2015 – L2 – Q3 – Preparation of Financial Statements, Financial Statement Analysis"

  • 20 Marks

FA – Aug 2022 – L1 – Q5 – Interpretation of financial statements (Financial Ratios)

Calculation and comparison of financial ratios for two businesses to assess performance, followed by a discussion of which business is performing better.

a) Garu and Gushegu are two businesses that compete in the same market and have been trading for a number of years. The following information relates to their results for the year ended 31 December 2021:

Account Garu (GHȼ’000) Gushegu (GHȼ’000)
Sales 4,455 5,264
Cost of Sales 2,549 2,632
Net Profit 1,075 1,137
Inventory at 1 January 820 518
Inventory at 31 December 1,040 498
Capital Employed 2,428 1,953
Receivables 1,200 1,324
Bank 75 980
Payables 750 720

There are no other current assets or current liabilities.

Required:
Calculate the following ratios for each of the two businesses: i) Return on Capital Employed (ROCE)
ii) Gross Profit Margin
iii) Current Ratio
iv) Liquid (Acid Test) Ratio
v) Inventory Turnover
(10 marks)

b) Using the ratios calculated, discuss which of the two businesses appears to be performing better.
(10 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Aug 2022 – L1 – Q5 – Interpretation of financial statements (Financial Ratios)"

  • 20 Marks

FA – Nov 2021 – L1 – Q5 – Interpretation of financial statements (Financial Ratios)

Calculation and interpretation of financial ratios, including gross profit margin, net profit margin, ROCE, and liquidity ratios, and assessment of liquidity and profitability.

The following summary information relates to two businesses, Danyi and Napo. Both businesses traded in the same market sector for the year ended 31 December 2020.

Statement of Profit or Loss Accounts for the year ended 31 December 2020:

Required:
a) Calculate the following ratios for Danyi and Napo:
i) Gross profit margin
ii) Net profit margin
iii) Return on capital employed (ROCE)
iv) Current ratio
v) Liquid (acid test) ratio
vi) Inventory turnover
(6 marks)

b) Use the ratios calculated in a) to assess:
i) The liquidity of both businesses
ii) The profitability of both businesses
(8 marks)

c) Advise management of both Danyi and Napo on the actions they should now take to improve liquidity and profitability.
(6 marks)

 

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Nov 2021 – L1 – Q5 – Interpretation of financial statements (Financial Ratios)"

  • 20 Marks

FA – Nov 2020 – L1 – Q5 – IAS 7: Statement of cash flows | Interpretation of financial statements (Financial Ratios)

Analysis of financial performance using ratios and calculation of additional liquidity ratios and explanation of the importance of the statement of cash flows.

The following financial information relates to Mawoekpor Ltd. for the year ended 31 December 2019 (with comparative figures for the year ended 31 December 2018):

Statement of Financial Position as at 31 December 2019

Required:
a) Select THREE (3) of the ratios listed above and briefly outline what information each ratio provides to users of financial information, commenting specifically on the financial results of Mawoekpor Ltd.
(9 marks)

b) Calculate TWO (2) additional ratios for both 2018 and 2019 that would provide further evidence of the liquidity of the company.
(5 marks)

c) Explain THREE (3) importance of preparing a statement of cash flows.
(6 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Nov 2020 – L1 – Q5 – IAS 7: Statement of cash flows | Interpretation of financial statements (Financial Ratios)"

  • 20 Marks

FRPA – APRIL 2023 – L3 – Q4 – Ratio Analysis and Performance Report for Loan Assessment

Compute five specified ratios for 2021 and 2020 using provided financial statements and write a report analyzing the company's performance comparing the two years.

As the Credit Officer for TCB Bank, Alpha Technology Solutions Limited has submitted its financial statements as part of the process to secure a loan of GHS 5million. You are required to:
i. Compute the following ratios for 2021 and 2020.
• Gross Profit Margin
• Return on Capital Employed
• Acid Test Ratio
• Payable period
• Debt to equity

ii. Write a report to the Head of Credit analyzing the performance of the company for the 2020 and 2021. Your report should explain the ratios and analyze them in relation to the previous year.

ALPHA TECHNOLOGY SOLUTIONS LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31ST DECEMBER 2021

2021 (GHS) 2020 (GHS)
NON-CURRENT ASSETS
Property, Plant and Equipment 438,631 428,210
Fixed Deposit – 400,000
Total Non-Current Assets 438,631 828,210
CURRENT ASSETS
Inventories 2,284,401 2,409,650
Accounts Receivable 2,712,529 1,368,010
Cash on Hand and Bank 642,951 2,177,519
Total Current Assets 5,639,881 5,955,179
TOTAL ASSETS 6,078,512 6,783,389
2021 (GHS) 2020 (GHS)
LIABILITIES AND SHAREHOLDERS’ EQUITY
NON-CURRENT LIABILITIES
Loans 115,484 115,484
Deferred Tax 18,127 22,110
Total Non-Current Liabilities 133,611 137,594
CURRENT LIABILITIES
Accounts Payable 1,843,574 2,869,489
Current Tax 30,512 129,464
Total Current Liabilities 1,874,086 2,998,953
Total Liabilities 2,007,697 3,136,547
SHAREHOLDERS’ EQUITY
Stated Capital 1,240,000 1,240,000
Retained Earnings 2,830,815 2,406,842
Total Shareholders’ Equity 4,070,815 3,646,842
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 6,078,512 6,783,389

ALPHA TECHNOLOGY SOLUTIONS LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31ST DECEMBER 2021

2021 (GHS) 2020 (GHS)
Revenue 11,180,208 12,957,649
Direct Cost (7,446,676) (9,703,650)
Gross Profit 3,733,532 3,253,999
Other Income – 23,436
Administrative Expenses (3,168,234) (2,483,480)
Operating Profit 565,298 793,955
Income Tax Expense (141,325) (198,489)
Profit/(Loss) After Taxation 423,973 595,466

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FRPA – APRIL 2023 – L3 – Q4 – Ratio Analysis and Performance Report for Loan Assessment"

  • 20 Marks

ITA – APR 2023 – L1 – Q5 – Accounting Ratios Computation

Compute specified accounting ratios for 2020 and 2021 using the provided financial statements for Lynmed Pharmacy Limited.

As a Loan officer for HBF Bank, you have received the below listed financial statements from a pharmacist requesting for a loan of GH$100,000,00. Using the financial statement presented below, compute the following accounting ratios for the years 2020 and 2021. a. Gross profit/(loss) margin b. Current Ratio c. Acid Test Ratio d. Debt to equity ratio e. Inventory period (Total: 20 marks)

LYNMED PHARMACY LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31. DECEMBER 2021

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES Account Payable Taxation Total Liabilities SHAREHOLDERS’ EQUITY Stated Capital Shareholders Account Income Surplus Total Shareholders’ Equity TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

65,447 118,58

65,447 118,58

(Note: OCR is repeated and garbled; figures appear as 65,447 and 118,58 for different lines/years, but incomplete. Assuming for model: two years’ data, e.g., 2020: Accounts Payable 65,447, Taxation 118,58? But clearly OCR error, perhaps 65,447 for 2020 Payable, 118,580 for Taxation or something. Income statement not provided. For answer, I’ll assume typical figures or note incompleteness.)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "ITA – APR 2023 – L1 – Q5 – Accounting Ratios Computation"

  • 1 Marks

FA – Nov 2012 – L1 – SA – Q11 – Sale of Goods

Calculating the commission based on gross sales.

Apple Foods Limited sells goods supplied by Gold Foods Plc at a fixed price calculated to give a gross profit margin of 50%. Apple Foods, being an agent, receives a commission of 12.5% of the gross sales made by it. During the period ending 31 October 2012, Apple Foods sold goods costing N184,000. The commission receivable by Apple Foods will be:

A. N4,600
B. N23,000
C. N46,000
D. N184,000
E. N368,000

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Nov 2012 – L1 – SA – Q11 – Sale of Goods"

  • 20 Marks

FR – Nov 2015 – L2 – Q3 – Preparation of Financial Statements, Financial Statement Analysis

This question requires preparing a cash flow statement for CL Ltd using IAS 7 and calculating the gross profit margin based on changes in purchase and selling prices.

(a) CL Ltd is a wholesaler and retailer of office furniture. Extracts from the company’s financial statements are set out below:

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED:

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2015:

Description Stated Capital Capital Surplus Income Surplus Total
Balances b/f 8,500 2,500 15,800 26,800
Share issue 12,900 – – 12,900
Comprehensive income – 5,000 7,000 12,000
Dividends paid – – (4,000) (4,000)
Balances c/f 21,400 7,500 18,800 47,700

STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH:

Note:
Non-current assets
During the year, the company redesigned its display areas in all of its outlets. The previous displays had cost GHS10 million and had been written down by GHS9 million. There was an unexpected cost of GHS500,000 for the removal and disposal of the old display areas. Also, during the year, the company revalued the carrying amount of its property upwards by GHS5 million, and the accumulated depreciation on these properties of GHS2 million was reset to zero.
All depreciation is charged to operating expenses.

Required:
Prepare a statement of cash flows for CL Ltd for the year ended 31 March 2015 in accordance with IAS 7 – Statement of Cash Flows. (15 marks)

(b) The directors of CL Ltd are concerned at the deterioration in its bank balance and are surprised that the amount of gross profit has not increased for the year ended 31 March 2015. At the beginning of the current accounting period (i.e. on 1 April 2014), the company changed to importing its purchases from a foreign supplier because the trade prices quoted by the new supplier were consistently 10% below those of its previous supplier. However, the new supplier offered a shorter period of credit than the previous supplier (all purchases are on credit). In order to encourage higher sales, CL Ltd increased its credit period to its customers, and some of the cost savings (on trade purchases) were passed on to customers by reducing selling prices on both cash and credit sales by 5% across all products.

Required:
(i) Calculate the gross profit margin that you would have expected CL Ltd to achieve for the year ended 31 March 2015 based on the selling and purchase price changes described by the directors. (2 marks)

(ii) Comment on the directors’ surprise at the unchanged gross profit and suggest what other factors may have affected gross profit for the year ended 31 March 2015.

(3 marks)
(Total: 20 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FR – Nov 2015 – L2 – Q3 – Preparation of Financial Statements, Financial Statement Analysis"

  • 20 Marks

FA – Aug 2022 – L1 – Q5 – Interpretation of financial statements (Financial Ratios)

Calculation and comparison of financial ratios for two businesses to assess performance, followed by a discussion of which business is performing better.

a) Garu and Gushegu are two businesses that compete in the same market and have been trading for a number of years. The following information relates to their results for the year ended 31 December 2021:

Account Garu (GHȼ’000) Gushegu (GHȼ’000)
Sales 4,455 5,264
Cost of Sales 2,549 2,632
Net Profit 1,075 1,137
Inventory at 1 January 820 518
Inventory at 31 December 1,040 498
Capital Employed 2,428 1,953
Receivables 1,200 1,324
Bank 75 980
Payables 750 720

There are no other current assets or current liabilities.

Required:
Calculate the following ratios for each of the two businesses: i) Return on Capital Employed (ROCE)
ii) Gross Profit Margin
iii) Current Ratio
iv) Liquid (Acid Test) Ratio
v) Inventory Turnover
(10 marks)

b) Using the ratios calculated, discuss which of the two businesses appears to be performing better.
(10 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Aug 2022 – L1 – Q5 – Interpretation of financial statements (Financial Ratios)"

  • 20 Marks

FA – Nov 2021 – L1 – Q5 – Interpretation of financial statements (Financial Ratios)

Calculation and interpretation of financial ratios, including gross profit margin, net profit margin, ROCE, and liquidity ratios, and assessment of liquidity and profitability.

The following summary information relates to two businesses, Danyi and Napo. Both businesses traded in the same market sector for the year ended 31 December 2020.

Statement of Profit or Loss Accounts for the year ended 31 December 2020:

Required:
a) Calculate the following ratios for Danyi and Napo:
i) Gross profit margin
ii) Net profit margin
iii) Return on capital employed (ROCE)
iv) Current ratio
v) Liquid (acid test) ratio
vi) Inventory turnover
(6 marks)

b) Use the ratios calculated in a) to assess:
i) The liquidity of both businesses
ii) The profitability of both businesses
(8 marks)

c) Advise management of both Danyi and Napo on the actions they should now take to improve liquidity and profitability.
(6 marks)

 

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Nov 2021 – L1 – Q5 – Interpretation of financial statements (Financial Ratios)"

  • 20 Marks

FA – Nov 2020 – L1 – Q5 – IAS 7: Statement of cash flows | Interpretation of financial statements (Financial Ratios)

Analysis of financial performance using ratios and calculation of additional liquidity ratios and explanation of the importance of the statement of cash flows.

The following financial information relates to Mawoekpor Ltd. for the year ended 31 December 2019 (with comparative figures for the year ended 31 December 2018):

Statement of Financial Position as at 31 December 2019

Required:
a) Select THREE (3) of the ratios listed above and briefly outline what information each ratio provides to users of financial information, commenting specifically on the financial results of Mawoekpor Ltd.
(9 marks)

b) Calculate TWO (2) additional ratios for both 2018 and 2019 that would provide further evidence of the liquidity of the company.
(5 marks)

c) Explain THREE (3) importance of preparing a statement of cash flows.
(6 marks)

Login or create a free account to see answers

Login
Register

Find Related Questions by Tags, levels, etc.

Report an error
Report an error

You're reporting an error for "FA – Nov 2020 – L1 – Q5 – IAS 7: Statement of cash flows | Interpretation of financial statements (Financial Ratios)"

knowsia

Elevate your professional expertise across key business domains with our comprehensive training programs

Our offerings

Community

Contact Info

  • +233203701923
    +233543919232
  • info@knowsia.com

Customer

Get In Touch

Follow us on our social media and get daily updates.

Facebook-f Twitter Linkedin-in Envelope
Oops!

This feature is only available in selected plans.

Click here to view all plans

Click on the login button below to login if you’re already subscribed to a plan or click on the upgrade button below to upgrade your current plan.

Login
Upgrade Plan

If you’re not subscribed to a plan, click on the button below to choose a plan

Subscribe to a plan

Pick a Form

Professional Tutor Application Form
Academic Tutor Application Form
Student Tutor Application Form