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Business of Chef One - Return on Proprietor’s Capital - Ratio analysis and Report - Accounting Assessment Answer
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Internal Code: 1AGACB
Required
(a) Calculate the following ratios for 2017 and 2018:
i. profit margin
ii. return on proprietor’s capital
iii. current ratio
iv. quick ratio
v. equity ratio
vi. inventory turnover.
(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.
Accounting Assessment Answer
TASK: Ratio analysis and report The following information relates to the business of Chef One, and the owner is concerned about the profitability and financial structure of his business at 30 June 2018, especially since the bank is requiring repayment of the business’s overdraft.
Required
(a) Calculate the following ratios for 2017 and 2018:
i. profit margin
ii. return on proprietor’s capital
iii. current ratio
iv. quick ratio
v. equity ratio
vi. inventory turnover.
(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.
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