Question

EXHIBIT 5: GRIG PROFIT-AND-LOSS AND BALANCE SHEET, DECEMBER 2015 (IN €) Profit and Loss December 2015 Balance Sheet December 2015 Liabilities 32,590 Assets Fixed Assets Cash 1,009 Revenue Variable Costs Freelance Knitters Gross Profit 16,062 1,452 15,076 Debtors Furniture and Fixtures Stock Current Assets Total Assets 270 740 Rent 2,019 Staffing 4,225 7,462 156 2,019 Liabilities Insurance Loan Repayments Website 858 1,740 Loan Total Current Liabilities 920 920 Operating Costs Net Profit 14,441 Equity Profit-and-Loss Summary Owner's Equity 635 295 635 Net Assets 1,089 2,019 Profit/Loss 635 2019 Source: Case author, based on company files EXHIBIT 6: GRIG CASH-FLOW FORECAST (INE) February March April May June July August September October November December January 400 1.200 1,350 1,600 1,600 1,450 1.200 1,400 1.700 3,200 4,500 300 240 640 1.800 500 1.700 700 2.050 880 2.480 1,300 2,900 1.230 1,400 3.830 1,400 2,850 1.600 3.030 2,000 5280 2.500 7.000 500 800 3,580 696 986 205 896 100 812 100 124 100 100 783 0 175 958 928 0 220 1.148 828 100 325 1253 741 100 350 1191 1856 100 400 2356 100 350 299 2610 100 525 3235 60 500 700 380 CASH-FLOW FORECAST 2016-2017 Other Sales shop Fair sales and workshops Website sales TOTAL SALES COST OF SALES Shop and fair stock Freelance knitters Website stock VARIABLE COSTS Fittings Drawings Rent/Rates Power Insurance Loan repayments Fair costs, including travel Website FIXED COSTS TOTAL EXPENDITURE OPENING BALANCE CLOSING BALANCE 1,436 60 500 700 500 325 500 325 500 700 700 500 700 30 12 | 78 500 700 30 12 | 78 500 700 30 12 78 500 700 30 12 | 12 | 12 | 30 12 78 70 12 78 20 935 - 20 935 20 1,340 20 1,340 20 1.400 20 1,400 20 1340 1,340 1,400 1340 1,756 2,836 4,635 1.893 -834 -1,027 2,083 -1,027 -1,050 282 2,010 3.222 -640 2.593 -1,060 -1,173 2,531 -1,173 -804 2.686 -804 -640 3.756 212 1.639 681 6,042 1.720 6042 5,122 -834 212 681

Calculate Gross profit margin, Operating profit margin, Net profit margin and total return on total assets.

Answer 1

GROSS PROFIT MARGIN =Gross Profit/Revenue=15076/32500=0.463877

GROSS PROFIT MARGIN=46.39%

OPERATING PROFIT =Net Profit +Loan repayment =635+858=1493

OPERATING PROFIT MARGIN=Operating Profit/Revenue=1493/32500=0.045938

OPERATING PROFIT MARGIN=4.59%

NET PROFIT MARGIN=Net Profit/Revenue=635/32500=0.019538

NET PROFIT MARGIN=1.95%

RETURN ON TOTAL ASSETS=Net Profit/Total Assets=635/2019=0.314512

RETURN ON TOTAL ASSETS=31.45%