15. RST Co is considering purchasing an interest in its competitor XYZ Co. The managing director of RST Co has obtained the three most recent statements of comprehensive income and statements of financial position of XYZ Co as shown below.

XYZ CO

STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR

YEARS ENDED 31 DECEMBER

Revenue 18,000

2017

GHS'000 18,900 10,340 8,560 1,670 1,503 5,387 215 600 4,572 2,000 2,572

11,081 9,130

3,995 3,164 55

8,000 7,584

446 3,400 1,195 1,800

Cost of sales

Gross profit Distribution costs Administrative expenses Operating profit

Interest payable on bank overdraft Interest payable on 12% debentures Profit before taxation

Income tax

Profit after taxation

Assets

Non current assets

Land and buildings Plant and machinery

Current assets Inventory

Trade receivables Cash

Equity and liabilities

Equity

Share capital Retained earnings

Non-current liabilities

12% debentures 20Y1 20Y4

Current liabilities Trade payables Bank

Taxation Dividend payable

11,460 8,896

1,775 1,440 50

8,000 6,434

390 1,300 897 1,600

2016 GHS000

20,356

3,265 23,621

14,434 5,000

4,187 23,621

12,121 9,020

2,663 2,260 53

8,000 7,313

388 2,300 1,420 1,696

2016

10,440 7,560 1,565 1,409 4,586

104

600 3,882 1,380 2,502

2017 GHS000

21,141

4,976 26,117

15,313 5,000

5,804 26,117

2018

GHS'000 19,845 11,890 7,955 1,405 1,591 4,959 450 600 3,909 1,838 2,071

2018 GHS000

20,211

7,214 27,425

15,584 5,000

6,841 27,425

GHS'000

Required

Prepare a report for the managing director of RST Co commenting on the financial position of XYZ Co and highlighting any areas that require further investigation.

(Marks will be awarded for ratios and other financial statistics where appropriate.)