The financial statements for Harridges Ltd are given below for the two years ended 30 June 2012 and 2013. Harridges Limited operates a department store in the centre of a small town.

Dividends were paid on ordinary shares of £65,000 and £75,000 in respect of 2012 and 2013, respectively.

Required:

(a) Choose and calculate eight ratios that would be helpful in assessing the performance of Harridges Ltd. Use end-of-year values and calculate ratios for both 2012 and 2013.

(b) Using the ratios calculated in (a) and any others you consider helpful, comment on the business’s performance from the viewpoint of a prospective purchaser of a majority of shares.

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Harridges Ltd Income statement for the years ended 30 June 2012 2013 000 000 Sales revenue Cost of sales 2,600 3,500 (1,560) (2,350) .Gross profit Wages and salaries Overheads Depreciation 1,040 1,150 (320) (350) (260) (200) (150) (250) Operating profit 310 350 Interest payable (50) (50) Profit before taxation 260 Taxation (105) 300 (125) Profit for the year 155 175