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Bumbles Retail Co. sells a range of luxury organic food products to hotels and restaurants. The following information has been extracted from the management accounts:
$
Sales revenue
600,250
Cost of goods sold
296,875
Net profit
102,000
Average Capital employed
927,045
Period end inventory balance
45,890
Period end receivables balance
100,265
Period end cash balance
28,900
Period end current liabilities balance
110,590
Total number of transactions during the year
12,500
(a) Calculate the following key financial performance measures for Bumbles Retail Co:(i) Average sales transaction value (1 mark) ?
(ii) Gross profit margin (1 mark) ok
(iii) Net profit margin (1 mark) ok
(iv) Return on capital employed (1.5 marks)ok
(v) Current ratio (1 mark)? current assets/ current liabilities, still didn’t get correct answer
(vi) Acid test (quick) ratio (1 mark)? current assets-inventories/ current liabilities, no correct answer
(vii) Receivables days (1.5 marks)ok
Please do not set test questions and expect an answer!!
You must have an answer in the same book in which you found the question, and so you should use this forum to ask about which part of the answer you do not understand – then I will try and help you.
The average sales transaction value is the total sales revenue divided by the total number of transactions.
The current ratio is the period end current assets (inventory plus receivables plus cash) divided by the period end current liabilities.
The acid test ratio is the same as the current ratio, but leaving out the inventory.
Have you watched my free lectures on this? The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
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