ACCA F3 INTERPRETATION OF FINANCIAL STATEMENTS

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

Revenue 100,000
Gross Profit 40,000
Net Profit 16,000
Inventory 50,000
Trade Receivables 10,000
Cash 70,000
Trade Payables 20,000

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 %

= (16000 /100000) X100 %

=16 %.

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

=(40000 /100000 ) X100 %

= 40 %.

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

= (10000 / 100000) X 365 days

= 36.5 days.

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

=(10000 + 50000 + 70000 ) / 20000

= 6.5

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

=(10000 + 70000) / 20000

=4.

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