8.3 Inge Larsen is the principal shareholder in Larsen Locations Limited. Her company provides services to businesses that are in the process of moving from one location to another. Inge and her staff plan the moves in detail, ensuring that all arrangements are made and that the move goes smoothly. Lately, the company has itself moved into larger premises and has taken on more staff.

Tom Wilton runs The Wilton Group plc, of which he is the major shareholder; the company’s principal activity is similar to Larsen’s. He is considering making an offer to Inge to buy the business from her, so that he can consolidate Wilton’s position as market leader in the region. He does not want Inge Larsen to know anything about his possible interest in her company until he has completed some basic financial analysis.

Tom obtains Larsen’s company accounts for the last three years from Companies House. Some of the extracted statement of profit or loss information is summarized in the following table:

20X7 20X6 20X5 20X4

£ £ £ £

Sales of services 3,709,480 3,690,900 3,502,404 3,497,983 Administrative expenses 1,446,437 1,204,448 1,109,932 1,100,555 Operating profit 756,734 841,525 795,046 787,046 Over the period 20X4 to 20X7 The Wilton Group plc has experienced steady growth in revenue, administrative expenses and operating profits of 2–3% per year.

Analyze Larsen’s revenue, administrative expenses and operating profits horizontally, reporting briefly on how the trends in these items compare with those of The Wilton Group plc.