Harold Smart, who is a small manufacturer trading as Space Age Projects, is very pleased with his recently completed financial results which show that a planned 20% increase in turnover has been achieved in the last accounting year.

The summarised results relating to the last three financial years are as follows:

Since 30 September 20X6, Harold Smart has not taken any drawings from the business. Harold Smart has been invited recently to invest £150,000 for a 5-year fixed term in government loan stock earning interest at 121/2% per annum.

Note: Taxation is to be ignored.

Notwithstanding his response to these financial results, Harold Smart is a very cautious person and therefore has asked a financial consultant for a report.

Required:

(a) A schedule of six accounting ratios or measures of resource utilisation covering each of the three years ended 30 September 20X9 of Space Age Projects.

(b) As financial consultant prepare a report to Harold Smart on the financial results of Space Age Projects given above including comments on the alternative future actions that he might take. Note: Reports should utilise the information given in answers to part (a) of this question.

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Year ended 30 September Sales Cost of sales Gross profit Administrative overheads Net profit As at 30 September Fixed assets: At cost Provision for depreciation Current assets: Stock Debtors Balance at bank Current liabilities: Creditors Bank overdraft 20X6 £ 155,000 (42,000) 113,000 3,000 14,000 2,000 19,000 5,000 5,000 20X7 £ 90,000 (74,000) 16,000 (3,000) 13,000 20X7 £ 165,000 (45,000) 120,000 4,000 19,000 1,000 24,000 4,000 4,000 20X8 £ 100,000 (75,000) 25,000 ( 5,000) 20,000 20X8 £ 190,000 (49,000) 141,000 7,000 15,000 3,000 25,000 6,000 6,000 20X9 £ 120,000 (92,000) 28,000 ( 6,000) 22,000 20X9 £ 206,000 (53,000) 153,000 30,000 10,000 40,000 9,000 2,000 11,000