Calculate the Sales, Capital, Operating Expenses, Net Profit, and Rate of Return on Capital for Applio Traders, given a 25% margin, Cost of Sales of 75,000, and a Sales to Capital ratio of 1:4, with O

Hey Pretty, good to see you again. Here are the calculations for Applio Traders: Part (i) Ratio Step 1: Calculate Sales and Gross Profit. Given Margin is 25% and Cost of Sales (COS) is 75,000. We know that Margin = Gross ProfitSales and Gross Profit = Sales - COS. Let Sales be S. 0.25 = (S - 75,000)/(S) 0.25S = S - 75,000 75,000 = S - 0.25S 75,000 = 0.75S S = (75,000)/(0.75) S = 100,000 So, Sales = 100,000. Now, calculate Gross Profit: Gross Profit = Sales - Cost of Sales Gross Profit = 100,000 - 75,000 Gross Profit = 25,000 Step 2: Calculate Capital. We are given that Sales and Capital are in the ratio 1:4. SalesCapital = (1)/(4) (100,000)/(Capital) = (1)/(4) Capital = 100,000 × 4 Capital = 400,000 Step 3: Calculate Operating Expenses and Net Profit. Operating Expenses are 2% of Capital. Operating Expenses = 0.02 × Capital Operating Expenses = 0.02 × 400,000 Operating Expenses = 8,000 Net Profit is Gross Profit minus Operating Expenses. Net Profit = Gross Profit - Operating Expenses Net Profit = 25,000 - 8,000 Net Profit = 17,000 Step 4: Calculate the Rate of Return on Capital (Ratio). This ratio measures the profitability relative to the capital invested. Rate of Return on Capital = Net ProfitCapital × 100\% Rate of Return on Capital = (17,000)/(400,000) × 100\% Rate of Return on Capital = 0.0425 × 100\% Rate of Return on Capital = 4.25\% The ratio is 4.25\%. Part (ii) Purchase Step 5: Calculate Purchases. We use the Cost of Sales formula: Cost of Sales = Opening Stock + Purchases - Closing Stock Substitute the known values: 75,000 = 10,000 + Purchases - 5,000 75,000 = 5,000 + Purchases Purchases = 75,000 - 5,000 Purchases = 70,000 The purchase amount is 70,000. Send me the next one 📸