You are the chief financial accountant of Soda plc, a manufacturer and wholesaler of soft drinks. Soda plc is in direct competition with Fizz plc and Pop Ltd.

The finance director has informed you that the board of directors is considering purchasing an interest in one of their two competitors in order to increase market share. This decision will be based on forward-looking market and management information. However, the directors seek to use data from recent corporate reports to provide a firm audited foundation on which to construct the necessary estimates and forecasts leading to their decision.

The finance director has provided you with the following table of statistics calculated from the most recent financial statements of both competitors:

You are required, using the above information, to prepare a report for the board of directors,

(a) comparing the results and the financial situation of the two competitors; (20 marks)

(b) suggesting, with reference to your comparison in

(a) above, other items in the companies' corporate report which bear on this decision and which might merit further investigation.

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Gross profit margin Fizz plc 40% Pop Ltd 40% Net profit margin Debt: Equity 15% 10% 15% 25% Stock turnover Debtor days Creditor days Dividend cover Interest cover Current ratio 8 times 4 times 63 days 40 days 65 days 65 days 3 2 7 5 Liquid ratio 1.25:1 0.9:1 1.75:1 1:1 Asset turnover 1.5 times 2 times