10 50 Question 2 The following information of Mendoza Limited and its competitor Luis Limited is given below: Income Statements for the year ended 31 December 2021 Mendoza Limited Income Statements for the years ended: Mendoza Luis Limited Limited $000 $000 Sales 40,000 38,000 Cost of goods sold -22,760 20,200 Gross profit 17,240 17,800 Less: Operating expenses -10,500 -8.600 Net income 8.740 9,200 Statements of Financial Position as at 31 December 2021 Mendoza Limited Assets $000 Furniture al net book value 8.000 Closing Inventory 2.000 Trade receivables 4,530 Cash 2,110 Total assets 16.640 Luis Limited $000 10,700 3.249 2.300 1965 18,214 8.000 6,740 14 740 8.000 9.200 17200 Equity Share Capital Relained earnings Total equity Liabilities Trade payables Accruals Total liabilities Total liabilities and equity 1 300 300 1,900 16.640 960 54 1,014 18,214 Required: a Calculate the following ratios for each of the 2 years: Gross Profit Margin Net Profit Margin Inventory Turnover Perod IV Current Ratio (4 marks] (4 marks (4 marks (4 marks From the results of part a comment on the overall profitability of both companies (4 marks) [Total: 20 marks) DALL W