22.2 The following are the summarised balance sheets as at 31 December 20X1 and profit and loss accounts for the year ended on that date, of two competing companies in the same industry.

Gold Ltd Underwood Ltd

£000

£000

£000

£000 Fixed assets Freehold land and buildings 183 365 Plant and machinery, etc.

105 45 288 410 Current assets Stocks 140 160 Debtors 90 83 230 243 Current liabilities Creditors 82 150 Overdraft 3

85 Corporation tax 20 17 Proposed dividend 16 32 121 284 Net current assets/(liabilities)

109

(41)

397 369 8% Debenture loan 105 292 369 Share capital and reserves Called-up share capital 165 255 Profit and loss account 127 114 292 '
369 Sales 800 640 Cost of goods sold 650 478 Gross profit 150 162 Expenses (i) 87 (ii) 105 57 Profit before tax 63 Corporation tax 20 17 Profit after tax 43 40 Proposed dividend 16 32 27 8 Balance brought forward 100 106 Balance carried forward 127 114 (i) Including interest: overdraft £1,000; debenture £8,400.
(ii) Including interest: overdraft £6,000.
Required:
A comparison of the performance and financial affairs of the two companies, using appro¬ priate ratios and any other figures you consider relevant.