You are provided with the following information about a business: a. The sales of the business has...

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Finance

You are provided with the following information about abusiness:
a. The sales of the business has increased over the pastfinancial year;
b. The gross profit of the business has decreased;
c. The payment periods for both accounts receivable and accountspayable have increased; and
d. The amount values of inventory and cash have declined.

Asked: Briefly provide possible reasons for each of the abovementioned situations and indicate whether it should be regarded assigns of possible overtrading or not.

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aThe sales of the business has increased over the past financial year Explanation Increase in sales is generally through 2 factors a increase in per unit price or b rise in volume Here it is seems mainly due to rise in sales volume due to increase in credit sales b The gross profit of the business has decreased This is generally result of increase in raw material prices increase in COGS See Answer

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You are provided with the following information about abusiness:a. The sales of the business has increased over the pastfinancial year;b. The gross profit of the business has decreased;c. The payment periods for both accounts receivable and accountspayable have increased; andd. The amount values of inventory and cash have declined.Asked: Briefly provide possible reasons for each of the abovementioned situations and indicate whether it should be regarded assigns of possible overtrading or not.