ACCA F3 INTERPRETATION OF FINANCIAL STATEMENTS

The accounts of XXX for year ended 31 December 2010 include the following information:

Revenue 300,000
Gross Profit 90,000
Net Profit 36,000
Inventory 10,000
Trade Receivables 70,000
Cash 60,000
Trade Payables 70,000

1. Calculate the Net Profit Percentage.

2. Calculate the Gross Profit Percentage.

3. Calculate the Receivables payment Period (All sales are on credit).

4. Calculate the Current Ratio.

5. Calculate the Quick Ratio. Suggested solutions:

Suggested Solutions

1. Net Profit Percentage =( Net Profit / Revenue ) X 100 %

= (36000 /300000) X100 %

=12 %.

2. Gross Profit Percentage =( Gross Profit / Revenue) X 100%

=(90000 /300000 ) X100 %

= 30 %.

3. Receivables Payment Period = (Receivables/ Revenue) X 365 days

= (70000 / 300000) X 365 days

= 85.2 days.

4. Current Ratio = (Trade Receivables + Inventory + Cash )/ Trade Payables

=(70000 + 10000 + 60000 ) / 70000

= 2

5. Quick Ratio= (Trade Receivables +Cash )/Trade Payables

=(70000 + 60000) / 70000

=1.86.

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