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Accounting Assignment Question
The investors of Lennox Surfers P/L have been provided the following financial statements for 2014 and 2015 financial year . Calculate the following ratios and comment on the profitability and efficiency of the business:
Net profit margin
Gross profit margin
Inventory turnover period
Average accounts receivable period
In relation to recent corporate crashes, what have been the main lessons/faults associated with the accounting information system and/or process? Explain
For each of the following items, state whether it is either;
Revenue or Expense or Asset or Liability or Equity.
A loan to another company
Shares issued to the public
Inventory purchased last week
Depreciation of equipment
Provision for long service leave
Excess payment to the tax department
Shares owned in another company
Prepaid insurance premiums
Deposit paid by a customer for work yet to be done
Dividend declared, not yet paid
Singed a contract for a $300,000 building
Undertook basic research for $40,000 on a new product
Delivered goods to a customer related to credit sales contract
Special staff training program related to new regulations cost $10,000
Cash purchase of a new computer for $23,000
Paid initial payment of $5,000 related to the financial lease of a bus
Accounting Assignment Solution
The following ratios will be calculated on the basis of the financial statements which have been provided by Lennox Surfers for the years 2014 and 2015.
The following ratios would be calculated to understand the profitability of the firm.
Gross Profit Margin:
Gross Profit Margin=Gross Profit ($’000) /Sales ($’000) (Robert N Anthony, 2010)
For the year 2014:
Gross Profit Margin=1440/3600
For the year 2015:
Gross Profit Margin=1590/3840
Net Profit Margin:
Net Profit Margin=Net Profit ($’000) /Sales ($’000) (Investopedia, 2015)…………………..