50. The following are account balances ofBrandy's BoatsandBurt's Campingshops taken from the entity's recordsfor the year ended June 30, 2021:

Brandy's Boat$(000)Burt's Camping$(000)

Cash & cash equivalent90140

Accounts receivables1,220460

Inventories1250680

Accumulated depreciation400320

Property, plant and equipment18801540

Accounts payable1200650

Revenue (all credit sales)75005000

Cost of goods sold 59004050

Long-term bank loan1300600

Selling expenses700400

General & admin expenses160200

Interest expense12560

Owner's capital (Beginning balance)925960

Additional information

Brandy's Boatsis in the business of selling boat parts.Burt's Campingis selling camping gear. Like lots of other retail shops, the Covid-19 situation has brought some hard times for the shops. Therefore all owners keep the profits in the business. The credit term for both shops is 5/N30. The accountant in Brandy's Boats has not included the depreciation of the year of $40,000 that is part of the general and admin expenses.

RatiosBrandy's BoatsBurt's Camping

Gross Profit Margin21.3%19%

Profit Margin7.7%5.8%

Current Ratio2.13 times1.97 times

Quick Ratio1.09 times0.92 times

Accounts Receivable Turnover6.15 times10.87 times

Days sales in receivables59.4 days33.6 days

Inventory Turnover4.7 times6 times

Daysof inventory on hand77 days61 days

c.Answer the MCQ (8 questions) below based on the information above and your answers in requirements a and b.

Choose the pair options that best describe the likely overall performance of the shops in the future/ long run, based on the overall ratios and information available.

1. Burt's Camping appears to perform worse in profitability and liquidity currently; however, it is more efficient in managing its inventory and credit customer and is likely to perform better in the future/ long run.

2. Brandy's Boats appears to perform better currently, and therefore is likely to perform better in the future/ long run, as can be seen from its current higher profitability and liquidity.

3. Brandy's Boats is likely to perform better in the long run, as seen from its lower turnover ratios.

4. Burt's Camping is likely to perform better in the long run, as seen from its higher turnover ratios.

a.

1 and 3

b.

1 and 4

c.

2 and 3

d.

2 and 4