Financial Information for robotics company (S) Sales 225,000 Cost of goods sold 105,000 Selling expenses 8,500 Administration expenses 6,000 Financial expenses 4,000 Accounts receivable 30,000 Robotics company credit policy 30 days Industry expense ratio 10% (a) Calculate the accounts receivable turnover ratio (sales ÷ accounts receivable) for this business - HSC - SSCE Business Studies - Question 24 - 2020 - Paper 1

To interpret the expense ratio for this business, we first find the total expenses by adding all expenses:

• Cost of goods sold: 105,000
• Selling expenses: 8,500
• Administration expenses: 6,000
• Financial expenses: 4,000

Total Expenses: $\text{Total Expenses} = 105,000 + 8,500 + 6,000 + 4,000 = 123,500$

Now, we calculate the expense ratio: $\text{Expense Ratio} = \frac{\text{Total Expenses}}{\text{Sales}} = \frac{123,500}{225,000} \approx 0.5489 \text{ or } 54.89\%$

This indicates that for every dollar the business makes in sales, approximately 54.89 cents is absorbed by expenses. This is significantly higher than the industry expense ratio of 10%, indicating that the business may have inefficiencies or higher costs compared to industry standards.