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# Profit &amp; Loss Accounts and Balance sheet.

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Introduction

Mr. Han's business year ending 2005 Mr. Han's business year ending 2006 Industry Averages Mr. Han's business year ending 2007 Return on Capital Employed 41% 45% 37% 11,325 15,575 + 8360 - 1610 = 50% Gross Profit % 44% 45% 39% 27,600 63,600 = 43% Net Profit % 28% 27% 30% 11,325 63,600 = 17.8% Stock Turnover 44 days 56 days 62 days 7700+7,400 36,000 = 76 days Debtor payment period 0.89 days 0.88 days 0.9 days 150 63,600 = 0.86 days Creditor payment period 5.7 days 13 days 12 days 1610 63,600 = 9.2 days Current Ratio 4.8:1 4.9:1 4.5:1 8360 1610 = 5.1:1 Acid Test 1.1:1 0.89:1 1:1 8360 - 7400 1610 = 0.6:1 The results that are shown above are accurately calculated. The figures are taken from Mr. Han's profit & Loss Accounts and Balance sheet 2007. The table signifies that Mr. Han's business for the year ending 2007. Return on Capital Employed: - Return on capital employed in the year 2005 was only 41%, it then went up in the following year by 4% and again in the year 2007 it went up to 50%. This signifies that the ratio has been improved. This ratio is improved because the business has increased investment. ...read more.

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