The following are the financial statements of D Limited, a wholesaling company, for the year ended 31 December:

The following information should be taken into consideration.
1 You may assume that:
(i) the range of products sold by D Limited remained unchanged over the two years;
(ii) the company managed to acquire its products in 2005 at the same prices as it acquired them for in 2004;
(iii) the effects of any inflationary aspects have been taken into account in the figures.
2 Ignore taxation.
3 All calculations must be shown to one decimal place.
You are required, using the information above, to assess and comment briefly on the company, from the point of view of:

(a) profitability;

(b) liquidity.

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Profit and Loss Accounts 2004 2004 2005 2005 000 000 000 000 Turnover - credit sales cash sales 2,200 2,640 200 160 2,400 2,800 Cost of sales Gross profit (1,872) (2,212) 528 588 Distribution costs (278) (300) Administration expenses (112) (114) Operating profit 138 Interest payable Profit on ordinary activities before tax 138 174 (32) 142