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
= ₦8,900
[ii] Working capital = Total assets - Total liabilites
= ( 15000 + 100000 + 25000) - ( 50000 + 60000)
= 140000 - 110000
= ₦30,000
[iii] Stock Turnover= cost of goods sold ÷ average stock
Note: average stock=opening stock + closing stock ÷ 2
37500 +15000 ÷ 2
= 52000
;52000÷26250
= 2times.