• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

I will be illustrating the financial state of SR building by different ratios. The ratios which Ill be using are net profit, gross profit, return on capital employed, asset turnover, current ratio, acid test ratio, stock turnover, debtor days,

Extracts from this document...

Introduction

TREVON MENGOT UNIT 2 BUSINESS RESOURCES P7 In this assignment I will be illustrating the financial state of SR building by different ratios. The ratios which I?ll be using are net profit, gross profit, return on capital employed, asset turnover, current ratio, acid test ratio, stock turnover, debtor days, the debt over equity and creditor ratio. SR building services Ltd Trading and profit and loss account Sales 650,000 Less cost of sales (390,000) Gross Profit 260,000 Less Expense Wages 60,000 Rent and rates 55,000 Light and Heating 18,000 Advertising 12,000 Insurances 11,000 Directors? Salaries 27,000 Sundry Expenses 12,000 195,000 Net Profit 65,000 SR Building Services Ltd Balance Sheet as at 31st December 2006 Fixed Assets 120,000 Current Assets Stock 100,000 ...read more.

Middle

It is also used to calculate the amount of sales a business has made which is then turned into the gross profit. Formula of gross profit ratio: gross profit divided by sales and multiplied by 100. 260,000÷650,000x100=40% Return Capital employed: money invested in the running of the business. this is used to find the amount of the net profit and how many times it covers the capital put into the business. Return on capital employed ratio: net profit divided by Capital employed x 100 Net profit: this is achieved when the business has paid all their expenditures and costs made by the business and it is used to calculate the amount of sales which was made. ...read more.

Conclusion

Formula: stock divided by cost of sales x 365 days. 100,000÷390,000×365 = 94 times Acid test ratio shows if the business has enough short term assets to cover its expenses without selling any properties owned by the business. Formula: current asset – stock divided by current liabilities. 135,000-35,000÷95,000 =1.1 Debtor day ratio it measures how long a business would take to pay off their debts through the year. Formula: debtors divided by sales x 365 days 35,000÷650,000×365 = 19 days Creditor day ratio measures how long the business would take to collect their debts through the year. Formula: creditors divided by purchases x 365 days 36,000÷390,000×365 = 33 days Debt over equity measures how the business controls their financial state which is calculated by dividing long term liabilities by the equity. 58,000÷105,000 = 0.5 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. This report has been produced as evidence for Unit 9 - 'Financial Services' - ...

    Before committing to a pension, Jamie McPherson must think carefully about the lifestyle he want when you retire and calculate how much you can afford to contribute towards your pension fund each month. You'll also need to take into account when you want to retire and whether you have income coming from other sources.

  2. In this assignment I will illustrate in a report the financial state of Domestic ...

    Gross profit percentage formulae: Gross profit percentage = Gross profit / Turnover x 100 Domestic Dog Home Gross profit percentage: 42% = 102250 / 244600 x 100 Net Profit Percentage To work out the Net Profit Percentage you have to divide the Net profit with the turnover and multiply it by 100.

  1. Complete Report on Askari Commercial Bank

    Without the proper introduction, the new account cannot be opened. The bank officer consider following precaution in this respect. * The introducer should come with the prospective customer to the bank, so there will be no doubt about the identity of customer.

  2. FINANCE ASSIGNMENT

    As a result financial reporting becomes tax influenced or even tax biased. The link between taxation and financial reporting is often found in those countries that do not have an explicit investor approach in their financial reporting orientation. This relationship can also vary over time.

  1. Identifying and describing the main financial service needs for a student starting at university

    Student MasterCard Free up your cash at University with the credit card that offers a 17.9% APR rate, no annual fee and up to 56 days' interest-free credit. Accepted around the world 20 million shops, hotels and restaurants and a choice of MasterCard or Visa.

  2. What does Finance involve.

    General costs: Picture Item Quantity Whole sale price Total cost Supplier Marketing & advertising/ job advertisements N/A .... �7,500.00(marketing) +�750.00( job advert human recourse) =�8,250.00 .... Uniform (apparel) 4 �3.50 �14.00 Woolworth I will buy my apparels form Woolworth because it as better price then Asda and Midwest salon.

  1. Exploring business purposes

    United Kingdom are 85% self sufficient in lamb, they struggle to compete with New Zealand imports which are plentiful, cheap, and popular with customers. England finds it hard to compete as the pricing is cheaper in New Zealand and the quality is by far better.

  2. Financial report. I will be talking about the financial performance of my business including ...

    buy stock and equipment but all this money was taken out before this profit was calculated. Another thing that is on the profit and loss account is a list of overheads. Overheads are all of the expenses to set up my business and also run my business.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work