Calculation and understanding of accounting ratios

The records of a business showed the following balances. Calculate the capital employed.

Feb/March 2020

A business had an average inventory of $\$40\,000$. Its inventory turnover rate was $5$ times a year. Mark-up stood at $20\%$. Calculate the revenue for the year.

Feb/March 2020

Jake’s current liabilities consisted of trade payables, while his current assets were inventory, trade receivables and cash at bank. Which action would improve his current ratio?

Feb/March 2020

Adit supplied the following information. For the financial year ended 31 January 2020: Profit for the year $27 900 Revenue $186 000 Credit purchases $93 075 As at 31 January 2020: Non-current assets at book value $43 700 Inventory $9 340 Trade receivables $14 010 Trade payables $9 435 Bank overdraft $2 240 Bank loan (repayable 2023) $6 000 Every item is sold on credit.

Feb/March 2020

How could a business owner tell that he is earning a return on his investment?

Feb/March 2023

At 30 September 2022, a company gave the balances shown below. cash held in hand $150$ bank loan - due for repayment on 31 December 2022 $2000$ bank loan - due for repayment on 1 May 2024 $3000$ bank overdraft $400$ trade receivables total $8000$ other receivables total $275$ inventory valued at $24\,000$ trade payables total $6000$ other payables total $95$ What was the value of the current ratio?

Feb/March 2023

The following details about Alan's business were given. liquid (acid test) ratio $2.5:1$ current liabilities $12\,000$ inventory $6000$ What was the total value of his current assets?

Feb/March 2023

A trader supplied the information below. What was the inventory turnover rate?

Feb/March 2024

A business gave the following data: - revenue $100\,000$ - gross profit $20\,000$ What percentage mark-up was achieved?

Feb/March 2025

Sally’s business has now used up its bank overdraft limit of $1500. Sally is thinking about the actions below. Which actions would improve the working capital of the business?

Feb/March 2025

What amount is added to the owner’s capital in order to calculate capital employed?

May/June 2021

George gave the information below. Non-current assets: $\$15\,000$ Inventory: $\$12\,000$ Trade receivables: $\$18\,000$ Trade payables: $\$8\,000$ His liquid (acid test) ratio came to $1.2 : 1$. What was the amount of his bank overdraft?

May/June 2021

A trader supplied the details shown below. Revenue: $\$3\,600$ Opening inventory: $\$100$ Purchases: $\$2\,600$ Closing inventory: $\$300$ Gross profit: $\$1\,200$ It was discovered that the closing inventory ought to have been $\$400$. Calculate the correct rate of inventory turnover.

May/June 2021

What must be added to owner’s capital in order to calculate capital employed?

May/June 2021

A trader gave the information below: cost of sales $80\,000$ expenses $4\,000$ profit for the year $16\,000$ What is the profit margin?

May/June 2021

A trader gave the following figures. Revenue: $3600$ Opening inventory: $100$ Purchases: $2600$ Closing inventory: $300$ Gross profit: $1200$ It was discovered that the closing inventory ought to have been $400$. What was the correct rate of inventory turnover?

May/June 2021

Sally’s business has already used up the bank overdraft limit of $1500$ and cannot settle its debts when they become due. Sally is thinking about these proposals. 1. requesting the bank to raise the bank overdraft limit to $2000$ 2. taking $2000$ from a relative as a loan and repaying it after six months 3. arranging a bank loan of $2000$ to be repaid in two years 4. transferring $2000$ from Sally’s personal bank account into the business bank account Which proposals would increase the working capital of the business?

May/June 2021

What must be added to owner’s capital to work out capital employed?

May/June 2021

A trader supplied the following information. What was the profit margin?

May/June 2021

The following details were given by a trader. Revenue: $3600$ Opening inventory: $100$ Purchases: $2600$ Closing inventory: $300$ Gross profit: $1200$ It was then discovered that the closing inventory ought to have been $400$. What is the correct rate of inventory turnover?

May/June 2021

Omer trades as a trader. He supplied the following details. For the year ended 30 April 2021 Credit sales $191000 Credit purchases $120000 Gross profit $80220 Commission receivable $20280 Expenses $29830 At 30 April 2021 Trade receivables $12400 Trade payables $7000

May/June 2021

A business supplied the information below. opening inventory: $6800$ closing inventory: $6000$ rate of inventory turnover: $5$ times What were the purchases for the year?

May/June 2022

A trader supplied the information below. profit earned in the year: $24\,000$ working capital: $20\,000$ capital: $120\,000$ non-current liability: $30\,000$ Calculate the return on capital employed.

May/June 2022

A trader is thinking about supplying goods on credit to a new customer. What might be worked out from the customer’s financial statements to show the usual length of time taken to pay for goods bought on credit?

May/June 2022

By the end of the financial year, a trader gave the information shown below. Revenue: $80\,000$ Gross profit: $20\,000$ Expenses: $12\,000$ What profit margin was achieved?

May/June 2022

A trader gave the details below. Profit earned in the year: $24\,000$ Working capital: $20\,000$ Capital: $120\,000$ Non-current liability: $30\,000$ What was the return on capital employed?

May/June 2022

Samuel, a trader, decided to send out statements of account every month. Which ratio does Samuel aim to improve by doing this?

May/June 2022

A business gave the following figures: opening inventory $6800; closing inventory $6000; inventory turnover rate $5$ times. What were the purchases during the year?

May/June 2022

By the end of the financial year, a trader gave the details shown below. revenue: 80 000 gross profit: 20 000 expenses: 12 000 What is the profit margin?

May/June 2022

The details below were supplied about a trader. profit earned during the year: 24 000 working capital: 20 000 capital: 120 000 non-current liability: 30 000 What was the return on capital employed?

May/June 2022

Samuel, who is a trader, chose to send out statements of account every month. Which ratio is Samuel aiming to improve by doing this?

May/June 2022

A trader gave the details below. Credit sales: $36000$ Cash sales: $10\%$ of total sales Net profit margin: $30\%$ What is the net profit?

May/June 2023

T Limited gave the following figures. Net profit before interest: $29200 Profit for the year: $28000 Equity at the year-end: $192000 $6\%$ debentures: $20000 Calculate T Limited’s return on capital employed.

May/June 2023

T Limited supplied the information shown below. What was the return on capital employed for T Limited?

May/June 2023

A trader supplied the information below. cash purchases during the year: \$14600 credit purchases during the year: \$10800 trade payables at year end: \$1400 What was the trader’s trade payables turnover?

May/June 2024

George gave the figures below. non-current assets: \$1500 inventory: \$1200 trade receivables: \$1800 trade payables: \$800 His liquid (acid test) ratio was $1.2:1$. What amount of bank overdraft did he have?

May/June 2024

Abhinav gave the information below. Purchases: - Year ended 31 December 2019: $112\,500 - Year ended 31 December 2020: $124\,000 Cost of sales: - Year ended 31 December 2019: $115\,500 - Year ended 31 December 2020: $120\,000 Inventory: - 1 January 2019: $7\,000 - 31 December 2019: $4\,000 - 31 December 2020: $8\,000 Calculate the rate of inventory turnover for the year ended 31 December 2020.

May/June 2024

Abhinav gave the information below. For the year ending 31 December 2019: purchases $112\,500$, cost of sales $115\,500$. For the year ending 31 December 2020: purchases $124\,000$, cost of sales $120\,000$. Inventory figures were: 1 January 2019 $7\,000$. 31 December 2019 $4\,000$. 31 December 2020 $8\,000$. What was the rate of inventory turnover for the year ending 31 December 2020?

May/June 2024

A trader gave the information below for the year ending 31 December. Total cash and credit purchases of goods for resale $150\,000$; cash purchases of goods for resale $17\,000$; credit purchases of non-current assets $25\,000$. At that date, his trade payables stood at $8\,000$. Calculate the trade payables turnover.

May/June 2025

The information below has been taken from an income statement. Cost of sales $15\,000$; gross profit $10\,000$; motor expenses $4\,000$; general expenses $1\,000$. What is the profit margin for the year?

May/June 2025

The information below is given at the close of Savid’s first year of trading: - Amount due from credit customers: $\$9\,600$ - Amount due to credit suppliers: $\$12\,800$ Yearly total sales are $\$220\,000$, and cash sales account for $\$24\,000$ of this. What is the trade receivables turnover in days?

May/June 2025

A trader gave the information below for the year that ended on 31 December. total cash and credit purchases of goods for resale $150\,000$ cash purchases of goods for resale $17\,000$ credit purchases of non-current assets $25\,000$ At that date, his trade payables stood at $8\,000$. What was the trade payables turnover ratio?

May/June 2025

The details below are taken from an income statement. cost of sales was $15\,000$ gross profit was $10\,000$ motor expenses were $4\,000$ general expenses were $1\,000$ What is the profit margin for the year?

May/June 2025

A trader produced the following predictions for the business for the next financial year. Average inventory: \$800 Rate of inventory turnover: 6 times Mark-up: 25% What are the predicted sales for the next financial year?

Oct/Nov 2020

A trader prepared the following forecasts for the business for the coming financial year. average inventory: $80\,000 rate of inventory turnover: 6 times mark-up: 25% What sales are forecast for the coming financial year?

Oct/Nov 2020

A trader drew up the following forecasts for the business for the coming financial year: average inventory $\$80\,000$; rate of inventory turnover $6$ times; mark-up $25\%$. What are the predicted sales for the coming financial year?

Oct/Nov 2020

A trader wants to raise his gross margin. How might this be achieved?

Oct/Nov 2020

What information is needed to calculate the return on capital employed for a sole trader?

Oct/Nov 2021

Which measure gives the clearest indication of a business’s liquidity?

Oct/Nov 2021

A trader gave the information below for the year ended $31\ \text{May}\ 2021$. Trade payables at $1\ \text{June}\ 2020$: $\$12\,250$ Trade payables at $31\ \text{May}\ 2021$: $\$42\,000$ Credit purchases during the year: $\$319\,375$ What was the trade payables turnover (days) for the year ended $31\ \text{May}\ 2021$?

Oct/Nov 2021

What information is needed to calculate the return on capital employed for a sole trader?

Oct/Nov 2021

Which measure gives the clearest indication of a business’s liquidity?

Oct/Nov 2021

Which data are needed to calculate the return on capital employed for a sole trader?

Oct/Nov 2021

For the year ending 31 May 2021, a trader supplied the details below. Trade payables at 1 June 2020: $12250$ Trade payables at 31 May 2021: $42000$ Credit purchases during the year: $319375$ What was the trade payables turnover (days) for the year ending 31 May 2021?

Oct/Nov 2021

Jabir runs an electrical wholesale business. The balances below were listed in his books on 30 September 2021. Inventory $8000 Purchases $109 000 Trade payables $11 600 Revenue $160 000 Trade receivables $22 600 Operating expenses $35 200 The inventory on 1 October 2020 stood at $11 000. Every sale and purchase was made on credit.

Oct/Nov 2021

Thabo supplied the information shown here. revenue: $250\,000$ gross margin: $20\%$ rate of inventory turnover: $5$ times What was the average inventory for the year?

Oct/Nov 2022

How may a trader raise her current ratio?

Oct/Nov 2022

Thabo gave the information below: revenue: 250 000 gross margin: 20% rate of inventory turnover: 5 times What was the average inventory for the year?

Oct/Nov 2022

Naeema gave the following figures: revenue: 28 000 gross profit: 11 900 profit for the year: 3 500 What profit margin did she achieve?

Oct/Nov 2022

When calculating the liquid (acid test) ratio, what are the liquid assets compared with?

Oct/Nov 2022

In what ways can a trader raise her current ratio?

Oct/Nov 2022

Jimmy recorded credit sales of $98550 in both 2021 and 2022. During 2022, his trade receivables turnover was exactly two days less than it had been in 2021. What was the difference in his total trade receivables in 2022?

Oct/Nov 2023

A business shared the following information: revenue: $20000$ gross margin: $25\%$ profit margin: $10\%$ There was no other income. What were the expenses?

Oct/Nov 2023

The business shows the following assets and liabilities: inventory: $2000$ trade receivables: $4000$ trade payables: $1100$ bank overdraft: $3100$ The owner intends to inject some of his own money into the business bank account in order to raise the current ratio to $2 : 1$. What amount must he deposit into the business bank account to make this happen?

Oct/Nov 2023

Lynne supplied the details below for her trading business: for the year ending $31$ August $2023$: revenue: cash sales: $250000$ credit sales: $230000$ on $31$ August $2023$: trade receivables: $19530$ other receivables: $2100$ What was Lynne’s trade receivables turnover?

Oct/Nov 2023

Jimmy recorded credit sales of $98550$ in both $2021$ and $2022$. In $2022$, his trade receivables turnover period was precisely two days less than in $2021$. By how much did his total trade receivables change in $2022$?

Oct/Nov 2023

A business recorded an average inventory of $40\,000$. Its inventory turnover rate was $5$ times per year. Mark-up was $20\%$. What was the revenue earned during the year?

Oct/Nov 2024

Wayne gave the details below. non-current assets: $110\,000$ current assets: $25\,000$ current liabilities: $15\,000$ profit for the year: $23\,000$ What was the return on capital employed?

Oct/Nov 2024

A business had an average inventory of $40\,000$. Its inventory turnover rate was $5$ times per year. Mark-up stood at $20\%$. Calculate the revenue for the year.

Oct/Nov 2024

Wayne supplied the details shown below. Non-current assets: $110\,000$ Current assets: $25\,000$ Current liabilities: $15\,000$ Profit for the year: $23\,000$ What was the return on capital employed?

Oct/Nov 2024

A business has a trade payables turnover of $36$ days. What do these $36$ days indicate?

Oct/Nov 2024

Jonny gave the following details. inventory: $3500$, cash: $100$, bank overdraft: $1900$, trade receivables: $2400$, trade payables: $2100$. What was Jonny’s current ratio?

Oct/Nov 2025

Jamila’s business sells only one product type. The information below was given. Year 1: units sold $1000$, sales revenue $8000$, inventory turnover rate $28$ days. Year 2: units sold $1000$, sales revenue $10\,800$, inventory turnover rate $31$ days. What changed in year 2?

Oct/Nov 2025

Senga is worried that her business’s current ratio is deteriorating year by year. She has put forward the measures below. Which two measures would improve the current ratio of the business?

Oct/Nov 2025

Rushil is a trader and has presented his statement of financial position at 30 September 2025. Rushil has also supplied the following additional information: 1 Inventory at 1 October 2024 stood at $30000. 2 The profit for the year in his statement of financial position was calculated after loan interest charges of $2450 had been deducted. 3 For the year ended 30 September 2025: • sales came to $482000 ($387000 were on credit; the rest were cash sales) • purchases came to $310000 (all on credit).

Oct/Nov 2025