The following information is given for two businesses in the same industry for the year ended 30 June 20*8:

All purchases and sales were on credit.

Required

Prepare a summarised trading and profit and loss account for the year ended 30 June 20*8 for each business.

Prepare a summarised balance sheet at 30 June 20*8 for each business.

Required

Calculate the following ratios for each business:

a) Gross profit margin
b) Net profit margin
c) Return on capital employed
d) Overheads in relation to turnover ratio
e) Rate of stock turnover
f) Net current asset ratio
g) Liquid capital ratio
h) Debtors’ collection period
i) Creditors’ payment period.
Compare the performance of each business.

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Sales (all credit) Stock 1 July 20*7 Stock 30 June 20*8 Purchases (all credit) Overhead expenses Fixed assets Trade debtors Trade creditors Bank balance Capital 1 July 20*7 Drawings Jim Flack £ 230,000 12,400 11,600 58,600 84,600 200,000 14,000 16,000 2,400 142,000 16,000 Josie Chan £ 896,000 32,000 30,000 515,000 126,000 450,000 80,000 47,000 4,000 332,000 68,000