Formulas fat

Question 1

Inventory Turnover Ratio

Answer 1

Inventory Turnover Ratio (ITR)
= Cost of Goods Sold/Average Stock

Question 2

Average Holding Period

Answer 2

Average Holding Period = 360 / ITR

Question 3

Debtors Turnover Ratio (DTR)

Answer 3

Debtors Turnover Ratio (DTR)
= Credit Sales / (Average debtors + B/R)

Question 4

Average Collection period

Answer 4

Average Collection period = 360 / DTR

Question 5

Creditors Turnover Ratio (CTR)

Answer 5

Creditors Turnover Ratio (CTR)
= Credit Purchase / (Average creditors + B/P)

Question 6

Assets Turnover Ratio

Answer 6

Assets Turnover Ratio
= Sales / Total Assets

Question 7

NWC Turnover Ratio

Answer 7

NWC Turnover Ratio
= Sales / NWC

Question 8

Capital Employed Turnover Ratio

Answer 8

Capital Employed Turnover Ratio
= Sales / Capital employed

Question 9

Gross Margin

Answer 9

Gross Margin
= (revenue - cost of goods sold)/revenue

Question 10

Closing Stock

Answer 10

Unsold sales

Production - sales

Question 11

Absorption vs Marginal

Answer 11

Absorption:

Production overheads:
-> + Direct materials
-> + Direct labour
-> + Variable production overheads
-> + Fixed production overheads
-> - Less: Closing stock
-> - Less: Overabsorption of overheads
Non-production overheads:
-> + Variable selling overheads
-> + Fixed administrative overheads

Marginal:

Variable Production overheads:
-> + Direct materials
-> + Direct labour
-> + Variable production overheads
-> - Less: Closing stock
Fixed Production overheads:
-> + Fixed production overheads
Non-production overheads:
-> + Variable selling overheads
-> + Fixed administrative overheads

Question 12

Overabsorption of overheads

Answer 12

Overabsorption of overheads

Fixed production overheads - Actual production overhead

Question 13

Closing stock amount

Answer 13

Closing stock amount

Closing stock units * production overhead per unit