Detailed Description of the Assessment Component 2 For Component 2, you will hav

Detailed Description of the Assessment Component 2
For Component 2, you will have one task to complete – Task 1 (Financial Ratios)
Task 1 Financial Ratios
Using the projected income statement and Balance Sheet you have prepared in Task 2.
a) Calculate the following accounting ratios for your proposed business wing.
1. Gross Profit margin
2. Net Profit margin
3. Current Ratio
4. Acid Test Ratio
5. ROCE (Return on capital employed)
6. Gearing ratio
b) In addition to these calculations, you are required to compare, analyse, and interpret the result of the ratio with the past year’s average ratio for a similar existing service at LCCA.
. Interactive Statements for IFA BA BM (1).xlsx
Ratios Past Average
Gross profit margin 15%
Net Profit margin 10%
Current Ratio 3
Acid Test 1.5
Return on capital employed 25%
Gearing ratio 30%