O-LevelAccountingAnalysis and interpretation7707/12 · Oct/Nov 2021 · Q321 Mark

Sam and Rob each own a trading business. The income of each business is solely from the sale of goods. They provided the following information for the year ended 30 June 2020. [Figure showing table with return on capital employed, gross margin, profit margin, current ratio for Sam and Rob]

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ARob will find it easy to pay his current liabilities.

BRob's expenses are a higher proportion of his sales.

CSam is not employing his capital effectively.

DSam's goods are sold at a higher price.

✓ Correct answer

B: Rob's expenses are a higher proportion of his sales.

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Topic: Analysis and interpretation, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, Oct/Nov 2021 Paper 1 Variant 2, question 32.

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