GadgetsCom Pty. Ltd. Income Statement Assignment Sample

Subject Name : Accounting and Finance

Gross Profit Margin and Profit Margin Ratios Calculation - Answer 1

Income Statement of GadgetsCom Pty Ltd
For the financial year ending in 2020
Items	Amount in $'000
Income
Sales revenue		$ 5,500.00
Less: Cost of goods sold		$ (2,100.00)
Gross Profit		$ 3,400.00

Less: Expenses
Administration expenses
Office salaries expense	$ 825.00
Office utilities expenses	$ 125.00
Depreciation expense	$ 100.00	$ (1,050.00)

Selling and distributions
Sales salaries expense	$ 425.00
Sales utilities expenses	$ 35.00	$ (460.00)

Total Expenses		$ (1,510.00)
Earnings before int. and tax		$ 1,890.00
Less: Interest cost		$ (250.00)
Profit before tax		$ 1,640.00
Less: Tax expenses		$ (492.00)
Profit of the year		$ 1,148.00

Gross Profit Margin and Profit Margin Ratios Calculation - Answer 2

Balance Sheet of GadgetsCom Pty Ltd
Items	Amount in $'000
ASSETS
Non-Current assets
Land	$ 1,516.00
Buildings &Equipment	$ 2,169.00
Less: Accumulated depreciation	$ (350.00)	$ 3,335.00

Current Assets
Cash at bank	$ 168.00
Inventory	$ 600.00
Accounts receivable	$ 450.00	$ 1,218.00

TOTAL ASSETS		$ 4,553.00

LIABILITIES
Non-Current Liabilities
Bank loan	$ 2,000.00	$ 2,000.00

Current Liabilities
Accounts payable	$ 900.00
Notes payable (due in 12 months)	$ 250.00	$ 1,150.00

TOTAL LIABILITIES		$ 3,150.00
NET ASSETS		$ 1,403.00

Owner's Equity
Share capital	$ 866.00
Retained Earnings	$ 537.00	$ 1,403.00

Gross Profit Margin and Profit Margin Ratios Calculation - Answer 3

Profitability Ratios
Ratios	2019	2020
	Given	calculated
Gross profit ratio	55.00%	61.82%
Profit Margin	23.00%	20.87%

Gross Profit Ratio: This profitability ratio depicts the relation between gross profit and the total net sales revenue. The ratio for the company has increased from 55% to 61.82% over the past two years and this implies that it is able to effectively control the cost of goods sold and thus realizing higher profits.
Profit Margin: It depicts the proportion of net profit realized by a company in comparison to the sales revenue. The ratio for the company has depicted a decreased from 23% to 20.87% over the financial years 2019-2020. This means that the operational expenses if the company ahs increased over the past two years thus reducing the net profit position.

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