Jahed Ahmed
BMC000010360
P7 - Domestic Dog Homes Ratios
There are three types of ratios: performance, solvency and
profitability.
The current ratio compares the amount of assets in relation to
liabilities and it is a solvency ratio. This is worked out by:
Current assets l £40,275 = 2.46 =
2.5
Current liabilities £16,367
Therefore, this means that it would be better if Domestic Dog
Homes invested their money somewhere else because they
have more than enough money to keep themselves running.
The acid test ratio is done using the following formula which is
a solvency ratio.
Current assets – Stock £40,275 - £16,300
= 1.46
Current Liabilities £16,367
This shows how simple it would be to pay off debts without
having to sell stock. 1.46 would get rounded up to 1.5 which
means that they are in a good position.
The gross profit percentage shows how well the organisation
manages its stock purchases; a high number means that the
business is doing well and is controlling its costs.
Gross profit x 100 £102,250 x 100 =
238.62%
Turnover £42,850
This shows that they are doing very well and they have a high
percentage of turnovers.
BMC000010360
P7 - Domestic Dog Homes Ratios
There are three types of ratios: performance, solvency and
profitability.
The current ratio compares the amount of assets in relation to
liabilities and it is a solvency ratio. This is worked out by:
Current assets l £40,275 = 2.46 =
2.5
Current liabilities £16,367
Therefore, this means that it would be better if Domestic Dog
Homes invested their money somewhere else because they
have more than enough money to keep themselves running.
The acid test ratio is done using the following formula which is
a solvency ratio.
Current assets – Stock £40,275 - £16,300
= 1.46
Current Liabilities £16,367
This shows how simple it would be to pay off debts without
having to sell stock. 1.46 would get rounded up to 1.5 which
means that they are in a good position.
The gross profit percentage shows how well the organisation
manages its stock purchases; a high number means that the
business is doing well and is controlling its costs.
Gross profit x 100 £102,250 x 100 =
238.62%
Turnover £42,850
This shows that they are doing very well and they have a high
percentage of turnovers.
