The following information relates to the business of Al Batinah Group of Companies, and the owner is concerned about the
Posted: Mon Apr 25, 2022 7:38 am
The following information relates to the business of Al Batinah
Group of Companies, and the owner is concerned about the
profitability and financial
structure of his business at 31 December 2019, the following
information is provided:
Details 31 Dec 2020
(OMR)
31 Dec 2021 (OMR)
Sales 300,000 430,000
Cost of goods sold 80,000 200,000
Inventories 35,000 45,000
Other expenses 10,000 75,000
Net profit before Interest and Tax 160,000 170,000
Shareholders fund 400,000 400,000
Net profit after Interest and Tax 105,000 125,000
Capital employed 250,000 330,000
Cash 35,000 15,000
Bank 1,000 10,000
Accounts Receivables 26,000 37,000
Accounts Payables 30,000 40,000
Marketable Securities 10,000 -----
Noncurrent liabilities 320,000 370,000
You are required:
(a) Calculate the following ratios for 2020 and 2021:
• Gross Profit Margin
• Net Profit Margin
• Return on Capital employed
• Return on Investment
• Current Ratio
• Quick Ratio
• Inventory turnover Ratio
(b) Write a report to the owner highlighting strengths and areas of
concern in relation to the profitability, liquidity and financial
stability of the
business including recommendations to improve areas of concern
(approximately 250 words).
Group of Companies, and the owner is concerned about the
profitability and financial
structure of his business at 31 December 2019, the following
information is provided:
Details 31 Dec 2020
(OMR)
31 Dec 2021 (OMR)
Sales 300,000 430,000
Cost of goods sold 80,000 200,000
Inventories 35,000 45,000
Other expenses 10,000 75,000
Net profit before Interest and Tax 160,000 170,000
Shareholders fund 400,000 400,000
Net profit after Interest and Tax 105,000 125,000
Capital employed 250,000 330,000
Cash 35,000 15,000
Bank 1,000 10,000
Accounts Receivables 26,000 37,000
Accounts Payables 30,000 40,000
Marketable Securities 10,000 -----
Noncurrent liabilities 320,000 370,000
You are required:
(a) Calculate the following ratios for 2020 and 2021:
• Gross Profit Margin
• Net Profit Margin
• Return on Capital employed
• Return on Investment
• Current Ratio
• Quick Ratio
• Inventory turnover Ratio
(b) Write a report to the owner highlighting strengths and areas of
concern in relation to the profitability, liquidity and financial
stability of the
business including recommendations to improve areas of concern
(approximately 250 words).