1. The details given below are a summary of the balance sheets of four companies engaged in different industries.

A B C D

% % % %

Land and buildings 10 2 57 5

Other fixed assets 17 1 13 73

Stocks and work-in-progress 44 16 1

Trade debtors 6 77 1 13

Other debtors 11 2 5

Cash and investments 12 20 11 3

100 100 100 100

Capital and reserves 37 5 55 50

Creditors: over one year 12 5 6 25

Creditors: under one year

Trade 32 85 24 6

Other 16 5 15 11

Bank overdraft 3 8

Total capital employed 100 100 100 100

The activities of the four companies are as follows:

1 Operator of a chain of retail supermarkets

2 Lorry transport operator

3 Commercial bank with a network of branches

4 Contractor in the civil engineering industry

You are required to:

(a) State which of the above activities relate to which set of balance sheet details, giving a brief summary of your reasoning in each case.

(b) With the aid of practical examples discuss what you consider to be the major limitations of ratio analysis as a means of interpreting accounting information.