PEV Dec 2008

jackiepowell
jackiepowell Registered Posts: 72 Regular contributor ⭐
in AAT Level 4 (Level 8 in Scotland)
Couple of questions im lost on so i hope someone can help.

Task 2.1
What are the equations to work out. Return on Net Assets and Raw Materials Turnover in days??
I have tried all sorts of ways, i cant seem to work out the right answer.

Cheers
Jackie :crying:

Comments

  • garry_coombs
    garry_coombs Registered Posts: 108 Dedicated contributor 🦉
    Stock turnover in days is

    Closing stock / purchases of raw materials x 365 = x days

    so for SP2000 60000/(540000-60000) x 365 = 40.56 days


    Return on Net Assets is to work out the % of Net Assets that is earned in Profit.

    Profit / Net Assets x 100 = x%

    414000 / 2014000 x 100 = 20.56%
  • jackiepowell
    jackiepowell Registered Posts: 72 Regular contributor ⭐
    Thankyou soooo much. Huge help thank you!!!
  • taskey
    taskey Registered Posts: 1,800 Beyond epic contributor 🧙‍♂️
    garry_coombs wrote: »
    Stock turnover in days is

    Closing stock / purchases of raw materials x 365 = x days

    so for SP2000 60000/(540000-60000) x 365 = 40.56 days


    Return on Net Assets is to work out the % of Net Assets that is earned in Profit.

    Profit / Net Assets x 100 = x%

    414000 / 2014000 x 100 = 20.56%

    was going to post another question but found the answer here

    thanks Garry

    Tracy
  • Tube
    Tube Registered Posts: 27 Regular contributor ⭐
    garry_coombs wrote: »
    Stock turnover in days is

    Closing stock / purchases of raw materials x 365 = x days

    so for SP2000 60000/(540000-60000) x 365 = 40.56 days

    I have worked out this formula given by Garry, but I get 45.63 days.

    I've tried the same method with SP3000 and get 91.25 days

    Can someone tell me what I'm doing wrong? :001_unsure:

    Tube
  • lou123
    lou123 Registered Posts: 53 Regular contributor ⭐
    I haven't looked at the paper but the answer is worked out on the following:

    60,000 / 540,000 x 365 = 40.56 days


    As I said, this is an answer to how 40.56 days was worked out, not an answer to the original question.

    :001_smile:
  • Tube
    Tube Registered Posts: 27 Regular contributor ⭐
    Thanks for the reply Lou. I couldn't work this one out. I kept on getting a different answer than the one printed in the AAT exam answers paper.

    I'm still a bit puzzled though. Is the stock turnover in days worked out differently for raw materials? In my BPP book it mentions Average Stock/Cost of Sales x 365 days but does not mention the type of stock. :001_unsure:

    In this question, the Direct Materials figure is being used instead of the Cost of Sales figure.

    Thanks
    Tube

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