Delizio has also requested additional information on how his


  1. Delizio has also requested additional information on how his business is performing against similar Delicatessen businesses in Australia.

         Using the Australian Tax Office’s Small Business benchmark website

Using the available data from the website above: 

  • Write down the Financial Year dates provided (2020-22)
  • Find the benchmark figures for a Delicatessen.
  • Note down the following figures for a business with a turnover equivalent to Delizio’s:
  • Average Cost of Sales 
  • Average total expenses 
  1. Gross Profit ratio
  2. Calculate the benchmark Gross Profit ratio using the calculation

Compare the benchmark Gross Profit ratio calculated in i) to Delizio’s Gross Profit ratio previously calculated on your spreadsheet. Comment on Delizio’s performance compared to the industry standard (benchmark Gross Profit ratio).

  1. Net Profit ratio 
  2. Calculate the Benchmark Net Profit ratio using the calculation 100% – Average total expense 

Compare the benchmark Net Profit ratio calculated in i) to Delizio’s Net Profit ratio previously calculated on your spreadsheet. Comment on Delizio’s performance compared to the industry standard (benchmark Net Profit ratio).

Delizio’s Delicatessen
Profit & Loss Statement202020212022
Sales          3,945,000     4,561,230                                     4,789,500  
Less cost of goods sold          2,643,000     3,040,250                                     3,192,500  
Gross Profit          1,302,000     1,520,980                                     1,597,000  
Less Expenses   
Selling expenses             792,600     1,003,000                                     1,101,920  
Administration expenses               37,000          37,500                                            38,000 
Financial expenses             115,000        113,000                                          111,000 
Total expenses             944,600     1,153,500                                     1,250,920  
Net Profit / (Loss)             357,400         367,480                                         346,080 
Delizio’s Delicatessen
Balance Sheet202020212022
Current Assets   
Accounts receivable                45,300                 52,100                 71,000 
Inventory              186,500               214,000               263,200 
Cash                  8,000                   5,800                   1,200 
Total current assets              239,800               271,900               335,400 
Non-Current Assets   
Land and buildings              175,000               211,000               211,000 
Shop equipment              123,000               135,000               190,000 
Motor vehicles                42,000                 44,000                 39,000 
Total non-current assets              340,000               390,000               440,000 
Total Assets             579,800              661,900              775,400 
Current Liabilities   
Accounts payable              204,300               252,650               331,300 
Bank overdraft                          –                             –                   56,020 
Total current liabilities              204,300               252,650               387,320 
Non-Current Liabilities   
Mortgage                84,000                 81,000                 79,000 
Bank Loan                17,000                 73,000               120,000 
Total non-current liabilities              101,000               154,000               199,000 
Total Liabilities             305,300              406,650              586,320 
Net Assets             274,500              255,250              189,080 
Capital              299,600               274,770               256,200 
Add Net Profit              357,400               367,480               346,080 
Less Drawings–            382,500 –            387,000 –            413,200 
Total Equity             274,500              255,250              189,080 
Client  Name : Delizio’s Delicatessen        
Ratio Calculation Worksheet
RatiosCalculation Used20212022Comment
Liquidity (express as a ratio e.g. 1:1)
Current ratioCurrent Assets/Current Liabilities1.08:10,87:1Current ratio shows that company doesn’t have enough liquid assets to cover the short-term liabilities as the ratio below 1.2-2. Company should take steps to improve the current ratio.
Quick ratio(Current Assets-Inventory)/Current Liabilities0.23:10.19:1Decline in quick ratio represents an increse in short-term debt, a decrese in current assets or combination of both. Ideal quick ratio should be above 1. Company should work on increasing quick ratio.
Profitability (express as a percentage %)
Gross profit rateGross profit/Sales x 10033.35%33.34%Both years have similar gross profit margin
Net profit rateNet profit / Sales x 1008.06%7.23%Company had a decrese in net profit rate in 2022. Company should take steps to increse net profit rate to increse profit.
Average inventory(Opening Inventory+Closing Inventory)/ number of the periods200250238600No comment required
Inventory turnover rateCost of goods sold/Avarage Inventory15.1813.38Low turnover indicates weaker sales and declining demand for the company’s product. Ideal ITR is between 5 and 10.
Number of days inventory held365 Days / Inventory Turnover Ratio24.0427.28No comment required

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