Refer back to Activity 12.3 for information on Salmon and Tuna. You are further informed as follows:

(a) Their Statement of financial position as at 31 December 2010 includes items shown.

(b) In the year ended 31 December 2010 revenue items were as reported below.

Required: Comment on the liquidity of both companies, making inter-temporal as well as inter-firm comparisons based on not less than six sets of accounting ratios calculated for each company.

Data from Activity 12.3:

Salmon Ltd and Tuna Ltd are both retailers of ready-made garments. Salmon aims at the more expensive end of the market, Tuna at the cheaper end. The financial statements of both companies are shown below:

Required: Comment on the comparative profitability of both companies, on the basis of calculating four relevant accounting ratios.

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As at 31.12.2010 Inventory Trade receivables Cash and bank Trade payables Taxation Salmon Tuna £'000 £'000 472 298 52 217 38 328 32 39 294 198