Unit 2 P7 M3 Unit 5 P5 M2 D2

Topics: Generally Accepted Accounting Principles, Marketing, Profit Pages: 4 (681 words) Published: May 11, 2015
Ratio
Formula (U5 M2)
Workings – show calculation
Ratio Greggs
2011 (U5 M2)
Ratio Greggs
2010
Has ratio improved or declined?
Ratio measures-
Liquidity,
Profitability
or Efficiency
(a) Describe Greggs performance in 2010 (U5 P5 U2 P7)
(b) Compare Greggs performance 2011 to 2010. (U2 M3 U5 M2)
Gross Profit Margin %

61.3%
61.8%
Declined
Profitability
The business will calculate their gross profit, to allow the business to know their profit with sales of stock included. In 2010 Greggs performance shows that for every £1 that the business make Greggs get 61.8p (pence) profit. The cost per pound for 2010 was equal to 3.82p this what Greggs had for expenses.

However, in 2011 Gregg performance shows that every £1 the business make they made 61.3p profit. This shows that Greggs Profit have decreased by 0.5p. Also, Gregg’s sales declined from the previous year. Operating Profit Margin %

8.8%
7.9%
Improved
Profitability
The business will calculate their net profit, to allow the business to know their profit without sales of stock. In 2010 Gregg performance shows that for every £1 that the business receive Greggs make 7.9p profit. The cost per pound for 2010 was equal to 0.21.

However, in 2011 Gregg performance shows that every £1 the business receive they make 8.8p profit. This shows that Greggs Profit have increased by 0.9p. Also, Gregg’s sales improved from the previous year. This means that the business is making more profit for each £1. Current Ratio

0.68:1
0.74:1
Declined
Liquidity
Current ratio is a simple way for the business to use to calculate its liquidity. The current ratio shows that Greggs performance in 2010 that Greggs has 74p worth to every £1 that the business owes. And this means that the business is able to pay its debts easily out of the current assets.

However, Gregg performance in 2011 shows that the company has 68p worth to every £1 that the business owes. Also, this...
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