ACCA · Question 63 · Interpretation of Financial Statements

Section B - Case 2

Scenario: EcoBuild Ltd is preparing financial statements for the year ended 30 September 20X6. Draft profit before tax is $450,000. Adjustments required:

1. A machine costing $120,000 bought on 1 April 20X6 was incorrectly expensed in full. Depreciation is 20% straight-line (pro-rata).
2. Closing inventory was undervalued by $15,000.
3. An allowance for receivables of $8,000 needs to be created.
4. Rent of $12,000 paid for the quarter ending 30 November 20X6 was fully expensed.
   Draft Revenue is $2,000,000.

Using the revised Capital Employed figure from the previous question ($2,123,000), what is the Asset Turnover ratio?