M2: Mr. Han`s company
Analyse the performance of a business using suitable ratios.
Ratio
Gross Profit Gross Profit Percentage will show for every €1 made in sales
Percentage how much is left over as gross profit after the cost of goods
sold has been deducted in percentage.
Mr. Han`s company has a gross profit percentage of 43%
which means; for every €1 made in sales 43% is left over as
gross profit.
Net Profit Net Profit Percentage will show for every €1 made in sales
Percentage ow much is left over as net profit after all the expenses have
been deducted.
Mr. Han`s company has a net profit percentage is 32%
which means; for every €1 made in sales 32% is left over as
net profit.
Return on ROCE shows for every €1 invested in the business in owner’s
Capital capital or retained profits what per cent is being generated
Employed form profit.
Mr. Han`s company has a total of 22% on ROCE which
means; for every €1 used in the business there is a return of
22%.
Current Ratio This ratio shows the amount of current assets in relation to
current liabilities and is expressed as X:1.
Mr. Han`s company had a current ratio of 2:1 which means;
the company has enough liquidity to meet their short-term
debts.
Acid Test Ratio The acid test ratio shows just like the current ratio the
amount of current assets in relation to current liabilities, but
the stock deducted.
Mr. Han`s company has an acid test ratio of 1.4:1 which
Analyse the performance of a business using suitable ratios.
Ratio
Gross Profit Gross Profit Percentage will show for every €1 made in sales
Percentage how much is left over as gross profit after the cost of goods
sold has been deducted in percentage.
Mr. Han`s company has a gross profit percentage of 43%
which means; for every €1 made in sales 43% is left over as
gross profit.
Net Profit Net Profit Percentage will show for every €1 made in sales
Percentage ow much is left over as net profit after all the expenses have
been deducted.
Mr. Han`s company has a net profit percentage is 32%
which means; for every €1 made in sales 32% is left over as
net profit.
Return on ROCE shows for every €1 invested in the business in owner’s
Capital capital or retained profits what per cent is being generated
Employed form profit.
Mr. Han`s company has a total of 22% on ROCE which
means; for every €1 used in the business there is a return of
22%.
Current Ratio This ratio shows the amount of current assets in relation to
current liabilities and is expressed as X:1.
Mr. Han`s company had a current ratio of 2:1 which means;
the company has enough liquidity to meet their short-term
debts.
Acid Test Ratio The acid test ratio shows just like the current ratio the
amount of current assets in relation to current liabilities, but
the stock deducted.
Mr. Han`s company has an acid test ratio of 1.4:1 which
