The following is the income statement for Nikov and Co. for the year ended 31 December 2012, along with information relating to the preceding year.

Required:
Analyse the performance of the business for the year to 31 December 2012 in so far as the information allows. (E-8)

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Income statement for the year ended 31 December 2012 2011 000 000 Sales revenue 420.2 382.5 Cost of sales (126.1) (114.8) Gross profit 294.1 267.7 Salaries and wages (92.6) (86.4) Selling and distribution costs (98.9) (75.4) Rent and rates (22.0) (22.0) Bad debts written off (19.7) (4.0) Telephone and postage (4.8) (4.4) Insurance (2.9) (2.8) Motor vehicle expenses (10.3) (8.6) Depreciation-Delivery van (3.1) (3.3) -Fixtures and fittings (4.3) (4.5) Operating profit 35.5 56.3 Loan interest (4.6) (5.4) Profit for the year 30.9 50.9