You are an employee of a medium-sized, light engineering company. Your managing director, Sara Potter, asks you to analyse the accounts of your company, Turn-a-Screw Ltd, with a competitor, Fix-it-Quick.

Required:

Using the accounts of the two companies calculate the appropriate:

(a) Profitability ratios

(d) Gearing ratio

(b) Efficiency ratios

(e) Investment ratios.

(c) Liquidity ratios Briefly comment on your main findings for each category.

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Income Statement for the Year Ended 31 December 2012 Turn-a-Screw Fix-it--Quick 000 000 Revenue 2,500 2,800 Cost of Sales (1,000) (1,200) Gross Profit 1,500 1,600 Administrative expenses (includes loan interest) (900) (1,170) Distribution expenses (250) (200) Profit before Taxation 350 230 Taxation (76) (46) Profit for the year 274 184 Note: You have the following additional information for dividends Preference dividends (30) (20) Ordinary dividends (124) (94)