1. You have been asked by a client to advice on the financial position of two companies in a similar trade sector. You have been supplied with the following financial statements. Income Statement for the year ended 31 March 2016 Notes James Ltd 000 638 (331) Revenue Cost of sales Smith Ltd 000 493 (297) Gross profit Distribution costs Administrative expenses 307 (36) (99) 196 (29) (46) 1 Profit before taxation Taxation 172 (21) 121 (22) Profit for the year 151 99 Smith Ltd 000 000 000 000 Statement of financial position as at 31 March 2016 Notes James Ltd 000 000 Non-current assets (NBV): Property, plant and equipment 1 Current assets: Inventory 60 Trade and other receivables 35 Cash and cash equivalents 2 198 111 58 43 97 101 295 212 EEE Total assets Equity and liabilities: Share capital (1 share each) Retained earnings 50 161 30 66 211 96 20 Non-current liabilities: Borrowings Current liabilities: Trade and other payables Current tax payable Bank overdraft 2 2 74 10 74 12 10 84 96 84 116 Total equity and liabilities 295 212 EE Notes to the financial statements: 1. The non-current assets held by the companies are as follows: Land and buildings Fixtures and fittings Motor vehicles James Ltd 000 97 28 73 Smith Ltd 000 43 17 51 198 111 2. Trade and other payables for both companies include a proposed dividend. James Ltd has proposed a dividend of 50,000 and Smith Ltd a dividend of 40,000. Required: Calculate appropriate ratios (at least 2 from each group) and critically appraise the current financial position of each of the two companies. 30 marks