Practise calculating and interpreting gross profit margin, net profit margin and ROCE using IB Business Management SL questions.
Tipin (TI)
Tipin (TI) manufactures shirts using a batch production method.
Table 1 provides selected financial information for TI from:
- its profit and loss account for the year ending 31 May 2022
- its balance sheet at 31 December 2021.
Table 1: Selected financial information for TI (all figures in \$000s)
At the end of 2021, TI's current ratio was 2.1. Its net profit margin declined from 14.8 % in 2021 to 10.0 % in 2022.
Using your answer in part (c), comment on the relationship between the changes in Tl's current ratio from 2021 to 2022 and the changes in its net profit margin from 2021 to 2022.