1. The balance sheets and trading and profit and loss accounts for the year ended 30 June 20X2 of S Ltd and T Ltd are given in Tables 4.30 and 4.31. You may assume that stocks have increased evenly throughout the year. You are required to:

(a) Calculate three of the following ratios. separately for each company: (i) net profit for the year as a percentage of net assets employed at 30 June 20X2; (i) net profit for the year as a percentage of sales; (iii) gross profit for the year as a percentage of sales; (iv) current assets to current liabilities at 30 June 20X2; (v) liquid ratio at 30 June 20X2; and (vi) stock turnover during the year.

(b) Describe briefly the main conclusions which you draw from a comparison of the ratios which you have calculated for each company. Table 25.30: S Ltd and T Ltd Balance Sheet as on 30 June 20X2 S Ltd 60,000 Fixed assets at cost Less: Provision for dep. 20,000 T Ltd 30,000 10.000 40,000 20,000 Current assets Stock 57,000 30,000 Debtors 22,000 20,000 Cash 11,000 10,000 90,000 60,000 Less: Current liabilities 30,000. 30,000 Net current assets Net assets 60,000 30,000 1,00,000 50,000 95,000 45,000 5,000 5,000 1,00,000 50,000 Paid-up share capital Revenue reserve Table 25.31: S Ltd and T Ltd Trading and Profit and Loss Account for the year ended 30 June 20X2 (*) S Ltd T Ltd Sales 160,000 120,000 Stock at July 1,20X1 39,000 20,000 Add: Purchases 1,14,000 85,000 1,53,000 1,05,000 Less: Stock at June 30, 19X2 57,000 30,000 Cost of goods sold 96,000 75,000 Gross profit 64,000 45,000 Less: General expenses 56,000 39,000 Net profit for the year 8,000 6,000 Add: Balance brought forward 3,000 1,000 11,000 7,000 Less: Dividend paid 6,000 2,000 Balance carried forward 5,000 5,000