The following information in the image above was extracted from the books of Lompat Ventures...
The following information in the image above was extracted from the books of Lompat Ventures as at December 31, 2022.
a[i] Calculate:
Net profit
a[ii] Calculate:
Working capital
a[iii] Calculate:
Rate of stock turnover
Explanation
[i] Cost of goods sold = Opening stock + Purchases - Closing stock
= 37,500 + 30,000 + 15,000
= 52,500
Gross profit = Sales - Cost of goods sold
= 70,000 - 52,500
= 17500
Net profit = Gross profit - Expenses
= 17,500 - ( 2500 + 3500 + 2600)
= 17,500 - 8,600
= N8,900
[ii] Working capital = Total assets - Total liabilites
= ( 15000 + 100000 + 25000) - ( 50000 + 60000)
= 140000 - 110000
= N30,000
[iii] Stock Turnover= cost of goods sold ÷ average stock
Note: average stock=opening stock + closing stock ÷ 2
37500 +15000 ÷ 2
= 52000
;52000÷26250
= 2times.