Adrian Frampton was considering the purchase of one of two businesses. However, Frampton had only been provided with limited information about the businesses, as follows:

\section*{Additional information}
1 Average stock had been calculated by using the year's opening and closing stocks. Subsequently it was discovered that Business Y had overvalued its stock on 31 December 19 X9 by \(£ 10,000\).
2 Business X's administrative expenses included a payment for rent of \(£ 15,000\) which covered a three-year period to 31 December 19 X1.

3 A sum of \(£ 2,500\) was included in the administrative expenses of Business \(Y\) in respect of a holiday taken by the owner and his family.
4 Cash drawings for the year ended 31 December \(19 \times 9\) were:

\section*{Required:}

(a) Based on the information available prepare comparative trading and profit and loss accounts for the year ended 31 December \(19 \times 9\).

(b) Using the information provided and the accounting statements prepared in (a), calculate relevant accounting ratios in order to give Frampton a basis for assessing the performances of the two businesses. Comment on the results.

(c) What additional information is needed in order to assess more áccurately (i) the liquidity of the businesses;
(ii) the future prospects of the businesses?

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Information Summarised financial information for the year ended 31 December 19X9 Business X Cost of goods sold 400,000 Business Y 600,000 Administrative expenses 50,000 Average stock at cost 40,000 Working capital as at 31 December 19X9 90,000 60,000 50,000 250,000 Selling and distribution expenses Proprietor's capital at 1 January 19X9 15,000 200,000 Gross profit percentage mark-up on cost 20 35,000 350,000 25