Mr Liam Mcgrath
P5
Profitability
Gross profit percentage
256,200 x 100 = 57.70%
444,000
The gross profit percentage is calculated and then is compared to previous years to indicate if the business is growing or declining in sales. If the profit has increased than that means that the business has increased the amount of products sold before expenses are taken away. SIGNature’s gross profit was 57.70%. This is a reasonably high percentage this is an indicator that the economy may be good and the customers have more disposable income to spend. For Rhiannon this is a good indicator that her business in making a decent profit.
Net profit percentage
93,960 x 100 = 21.16%
444,000
The Net profit has taken into consideration the expenses that the business has spent to be able to provide the goods / services and this is the total profit that the business has made this year. The data can then be compared to the previous years and to competitors to see if they are improving or declining in their sales. SIGNature’s net profit is 21.16% meaning that they are spending just over half of their profit on their expenses. This is possible profit that Rhiannon can decide to take the money out for her or to retain within the business and invest it to maximise the potential profit for herself.
Return on Capital Employed
93,960 x 100 = 78.85%
119160
Capital employed is the total amount of money that has been invested into a company, so the return on capital employed percentage is the percentage amount of money that a person would get in return each year for the amount of money they invest. SIGNature’s return is 78.85p per £1.This would be a much better investment than putting it into a bank as current rates are extreme low and at best its 3%.
Liquidity
Current ratio
70,160 = 4.53: 1
15,500
Current ratio measures a company’s ability to meet financial obligations. It will always have the answer of ‘x’:1. The ‘X’ refers to the amount of cash that will be
Profitability
Gross profit percentage
256,200 x 100 = 57.70%
444,000
The gross profit percentage is calculated and then is compared to previous years to indicate if the business is growing or declining in sales. If the profit has increased than that means that the business has increased the amount of products sold before expenses are taken away. SIGNature’s gross profit was 57.70%. This is a reasonably high percentage this is an indicator that the economy may be good and the customers have more disposable income to spend. For Rhiannon this is a good indicator that her business in making a decent profit.
Net profit percentage
93,960 x 100 = 21.16%
444,000
The Net profit has taken into consideration the expenses that the business has spent to be able to provide the goods / services and this is the total profit that the business has made this year. The data can then be compared to the previous years and to competitors to see if they are improving or declining in their sales. SIGNature’s net profit is 21.16% meaning that they are spending just over half of their profit on their expenses. This is possible profit that Rhiannon can decide to take the money out for her or to retain within the business and invest it to maximise the potential profit for herself.
Return on Capital Employed
93,960 x 100 = 78.85%
119160
Capital employed is the total amount of money that has been invested into a company, so the return on capital employed percentage is the percentage amount of money that a person would get in return each year for the amount of money they invest. SIGNature’s return is 78.85p per £1.This would be a much better investment than putting it into a bank as current rates are extreme low and at best its 3%.
Liquidity
Current ratio
70,160 = 4.53: 1
15,500
Current ratio measures a company’s ability to meet financial obligations. It will always have the answer of ‘x’:1. The ‘X’ refers to the amount of cash that will be