You are given summarized information about two firms in the same line of business, namely A and B, as shown in Figure 17.9.

You are required to:

(a) produce a table of ratios calculated for both businesses;

(b) write a report briefly outlining the strengths and weaknesses of the two businesses, including comment on any major areas where simple use of the figures could be misleading.

Transcribed Image Text:

Figure 17.9 Financial statements for A and B Balance sheets at 30 June A B 000 000 000 000 000 000 Land Buildings 80 260 200 Less: Depreciation Plant Less: Depreciation Stocks Debtors Bank 8e 8 ' 00 80 200 150 180 280 20 40 110 570 80 100 100 90 10 180 200 Creditors Bank 110 50 120 160 Capital b/forward Profit for year Less: Drawings 100 120 80 650 300 100 400 40 360 Land revaluation 160 Loan (10 per cent p.a.) 100 130 200 650 Sales 1,000 3,000 Cost of goods sold 400 2,000