WAEC Accounting 2024 Theory — Question 12

Model answer

(a) Returns on shareholders' fund = Net profit / Shareholders' fund = Le140,000 / Le200,000 = 0.70 (Le0.70 per Le1 invested). (b) Acid test ratio = (Current assets - Stock) / Current liabilities = (Le220,000 - Le140,000) / Le50,000 = Le80,000/Le50,000 = 1.60 : 1. (c) Net profit margin = Net profit / Sales x 100% = Le140,000 / Le1,040,000 x 100% = 13.46%. (d) Working capital ratio = Current assets / Current liabilities = Le220,000 / Le50,000 = 4.40 : 1. (e) Stock turnover ratio = Cost of goods sold / Average stock. Average stock = (Le110,500 + Le140,000)/2 = Le125,250. Stock turnover = Le700,000 / Le125,250 = 5.59 times.