8.4 Uffington Limited was formed on 1 January 2014. The company’s unpublished income statement for 2014 and its statement of financial position as at 31 December 2014 are as follows:

Uffington Limited Income statement for the year ended 31 December 2014 £ £
Revenue 670,000 Less Cost of sales Purchases 570,000 Less Closing inventory (90,000) 480,000 Gross profit 190,000 Administration expenses (117,350)
Distribution expenses (21,600) (138,950)
Operating profit 51,050 Finance costs (5,600)
Profit for the year 45,450 Less Tax (5,450)
Profit after tax 40,000 Statement of financial position as at 31 December 2014 £ £ £
Cost Depreciation Net value Freehold land 160,000 – 160,000 Fixtures 30,000 21,000 9,000 Motor vehicles 56,000 39,200 16,800 246,000 60,200 185,800 Current assets:
Inventory 90,000 Trade receivables 44,250 Cash and cash equivalents 24,200 158,450 Less Current liabilities Trade payables 73,800 Taxation 5,450 (79,250)
Net current assets 79,200 265,000

£ £ £
Less Non-current liabilities 7% bonds (80,000)
Total net assets 185,000 Equity Ordinary shares of £1 each 100,000 Share premium 60,000 Reserves* 25,000 Total equity 185,000 *Profit after tax £40,000 less Dividend paid £15,000.
The company is about to embark on an expansion programme which will require at least £6m for the purchase of new businesses and to support investment in increased inventory levels. The chairman of the company has called for an analysis of the 2014 figures before approaching possible sources of funding.

(a) Comment on the performance of Uffington Limited for the year ended 31 December 2014 and on its financial position at that date. Support your comments with eight relevant accounting ratios.

(b) Suggest, and comment on the suitability of, two alternative ways for the company to raise £6m.