Hello sir, I have clicked on the notification bell several times in order to get updates of your videos but the error message I get is ‘‘ try again ‘’ please what do I do because I need your videos.
Kindly clarify,you said when cost of sales increases, gross profit will fall and later said when closing inventory is higher ,cost of sales is lower and gross profit will be higher. I do not understand.
Use figure to illustrate this. Eg opening inventory 3,000; purchases 10,000; closing inventory 4,000 sales 20,000 Therefore cost of sales will now be OI 3,000 plus pur 10,000 minus CI 4,000 given cost if sales of 9,000, Gross profit will be 11,000
Cost of sales will now be OI 3,000 plus pur 10000 minus CI 5,000 given cost of sales of 8,000 and gross profit of 12,000. You can see when cost of sales was higher (9,000) Gross profit was lower (11,000) and when the closing inventory increase from 4000 to 5000, cost of sales reduces from 9,000 to 8,000. The higher the cost of sales, the lower the gross profit and the higher the closing inventory the lower the cost of sales
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Amen
Sir please, can you give a breakdown of what makes up the Capital employed, I would like to hear from you
It depends on the definition of capital employed you want to adopt.But for a geared company,use equity plus interest bearing loans
@@Ezikan okay sir, thank you
Hello sir, I have clicked on the notification bell several times in order to get updates of your videos but the error message I get is ‘‘ try again ‘’ please what do I do because I need your videos.
It is network issues sir.
Kindly clarify,you said when cost of sales increases, gross profit will fall and later said when closing inventory is higher ,cost of sales is lower and gross profit will be higher. I do not understand.
I.e 20,000 minus 9,000. In this same way, let now increase the closing inventory to 5,000.instead of 4000 we used earlier.
Use figure to illustrate this. Eg opening inventory 3,000; purchases 10,000; closing inventory 4,000 sales 20,000 Therefore cost of sales will now be OI 3,000 plus pur 10,000 minus CI 4,000 given cost if sales of 9,000, Gross profit will be 11,000
Cost of sales will now be OI 3,000 plus pur 10000 minus CI 5,000 given cost of sales of 8,000 and gross profit of 12,000. You can see when cost of sales was higher (9,000) Gross profit was lower (11,000) and when the closing inventory increase from 4000 to 5000, cost of sales reduces from 9,000 to 8,000.
The higher the cost of sales, the lower the gross profit and the higher the closing inventory the lower the cost of sales
@@Ezikan Thanks for the explanation.It is clear now.