1 Analysis of Financial Performance Archer Company is a retailer and trades through its stores on the high street, selling high quality goods. The company has recently been suffering from rising costs, which it has been unable to pass on to its customers. In response to the number of people shopping via the internet, Archer Company has implemented a cost cutting strategy in the prior year, and in the current year asked shareholders for funds to help reduce its debt burden. The following financial information for the current year is available. Archer Company Ltd Statement of Comprehensive Income for the year ended March 31, 2019 2019 2018 Turnover/Revenue $$$ 2642479 SSS 2920514 Cost of Sales (1225963) (1272422) Gross Profit 1416516 1648092 Operating/Admin expense (1402929) (1608981) 13587 39111 Other operating income 0 8 Operating income 13587 39119 Non-operating income (interest) (7957) (1567) Profit before Interest & Tax 21544 40686 Interest payable & Charges (4421) (22392) Profit before tax 17123 18294 Tax on profit on Ordinary Activities (2045) (6248) Profit for the financial year 15078 12046 Archer Company Ltd Statement of financial Position as at March 31, 2019 Non- Current Assets Tangible Assets 2019 2018 $$$ $$$ 71857 149354 Current Assets Stocks 51908 73677 Debtors 489990 327768 Liquid Assets (Cash & Bank) 282580 497180 824478 898625 Less Current Liabilities: Accounts payables (563960) (702343) Net Current Assets 260518 196282 | Total Assets= (Tangible + Net Assets) 332,375 345636 Capital, Reserves & Long term Liabilities: Capital 317297 305251 Profit 15078 12046 Long term Creditors 0 28339 332375 345636 Required A. Calculate the following ratios: i. Profitability: Net Profit as a percentage of Sales ii. Liquidity: Acid test or Quick ratio iii. Efficiency: Debtors day (6 marks) B. State the benefits of using ratio analysis to interpret financial performance compared with just relying on the financial statements to make decisions. (8 marks) C. Use the information provided from the ratios calculated to do a comparative analysis over the two years on the profitability, liquidity, and efficiency of the business. (16 marks) (Total 30 marks)