Share
Explore BrainMass

small company taxes and turn on capital

10.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.

11. Explain the following terms.

Cost center and Cost units.

12. In what ways might investment decisions be affected
By non-financial factors?

13. State and explain two advantages that Discounted Cash flow
Has over Payback as a method of Capital investment appraisal.

14. Define Prudence.

15. Discuss how the concept of prudence might be relevant when
Considering
1. Goodwill
2. The Valuation of Stock in Trade.

16. It has been suggested that any department that is making a
Loss should be closed. Comments on this suggestion.

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.

State six other possible sources of finance.

18. State Six shortcomings or dangers in using ration analysis.

Attachments

Solution Preview

10.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.
Costs grew faster than sales. Examples could be hired more people, moved to a more expensive location, material costs have gone up, etc.

State three ways in which she may improve her return on Capital.
Increase sales, decrease cost of goods, decrease fixed costs.

11. Explain the following terms.

Cost center and Cost units.
A Cost Center is a ...

Solution Summary

Cost center and Cost units.

$2.19