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 James Ltd Smith Ltd Notes 000 00 Revenue 638 493 Cost of sales (331) (297) Gross profit 307 196 (36) (99) (29) (46) Distribution costs Administrative expenses 1 Profit before taxation 172 121 Taxation (21) (22) Profit for the year 151 99 Statement of financial position as at 31 March 2016 Notes James Ltd Smith Ltd 000 000 000 000 000 000 Non-current assets (NBV): Property, plant and equipment 1 198 111 Current assets: Inventory 60 58 Trade and other receivables 35 43 Cash and cash equivalents 2 97 101 Total assets 295 212 Equity and liabilities: Share capital (f1 share each) Retained earnings 50 30 161 66 211 96 Non-current liabilities: 20 Borrowings Current liabilities: Trade and other payables Current tax payable 2 74 74 10 12 Bank overdraft 10 84 96 - 84 116 Total equity and liabilities 295 212 Notes to the financial statements: 1. The non-current assets held by the companies are as follows: James Ltd Smith Ltd 000 000 Land and buildings Fixtures and fittings 97 43 28 17 Motor vehicles 73 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