Problem: A shopkeeper employs several assistants. For the year ended 30 April 2000 her gross profit ratio was 40% and gross profit was $80,000. For the year ended 30April 2001 her gross profit ratio was 35% Even though her gross profit had increased to $90,000.
State five possible reasons for the decrease in her gross profit ration.
State three ways in which she may improve her return on Capital.
1. Explain the following terms.
Cost center and Cost units.
2. In what ways might investment decisions be affected By non-financial factors?
3. State and explain two advantages that Discounted Cash flow Has over Payback as a method of Capital investment appraisal. Define Prudence.
4. Discuss how the concept of prudence might be relevant when Considering
1. Goodwill
2. The Valuation of Stock in Trade.
5. It has been suggested that any department that is making a Loss should be closed. Comments on this suggestion.
State three ways in which she may improve her return on Capital.17. The Company needs to improve the premises but the bank Refuses either to allow a further increase in overdraft Or to grant a loan.
8. State Six shortcomings or dangers in using ration analysis.