Business Accounting - 1359 Words

Unit 5 Business Accounting P5 Introduction In this assignment I will be using the profit and loss accounts and balance sheet for SIGNature s business to work out the Profitability, Liquidity and Efficiency Ratios. Profitability Gross profit Percentage sales Gross Profit Sales Turnover Ãâ€"100 244200 444000 Ãâ€"100=53% Net Profit Percentage Net ProfitSales turnoverÃâ€"100 73960444000Ãâ€"100=16.66% Return on Capital Employed (ROCE) Net Profit before interest and taxCapital EmployedÃâ€"100 73960149160Ãâ€"100=49.58% Liquidity Current Ratio Current AssetsCurrent Liabilities 7016026000=2.69 Acid Test Ratio/ Liquidity Ratio Current Assets-stockCurrent liabilties 70160-24420026000=1.75 Efficiency Debtors payment period†¦show more content†¦SIGNature s pays of its creditor within a month in 28 days this good for keeping a good relationship with their suppliers, because the suppliers will trust them to pay them back and the business could afford to ask for an extension from them if they need it because of the trust. Rate of stock turnover Average stockCost of goods soldÃâ€" 365 12000244200Ãâ€"365=17.93 (18 Days) This ratio measures the average amount of time an item of stock is held by a business, and is expressed in a number of days. The SIGNature business holds their stock for 18 days which is very good for the business because they are selling their stock every 18 days and making sales every month. D1 Introduction In this assignment I will write a conclusion to summarise the overall performance in Sharma and Ryan s first year of business. Profitability The percentages Sharma and Ryan received in their profitability is good. The Gross profit percentage is 53% this is good because the business is making a majority of profit from every  £1 in its sales in relation to the cost of making that sale. The Net profit percentage is the only bad result in this ratio, at 17% the business is spending too much on expenses for the business however this figure can be changed if they make the overall expenses cheaper so the ratio can increase. The ROCE (Return OnShow MoreRelatedAccounting Is The Language Of Business1286 Words   |  6 PagesAccounting is a major that teaches the language of business, it opens doors to the business world all over the globe, the possibilities with a accounting major is endless in the business field. Whether you want to run your own business or become a certified public accountant majoring in accounting gives you the establishment. A major plus in having a career in business is the flexibility it offers. 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