Analyse the financial statements that have been prepared by Cutting Edge Ltd. In particular, comment on the following aspects of the company:

• Areas of concern in financial performance, focussing mainly on information from the income statement.

Year to 31 Dec 2020 Year to 31 Dec 2010 Ek Ek Ek EK Sales revenue Products 752 713 Rent of chairs 1.698 1,380 2,450 2,102 Less cost of goods sold: Opening inventory 130 98 Purchases 381 343 511 441 Less closing inventory 167 130 Cost of goods sold 344 311 Gross profit 2,106 1,791 Less expenses: Salaries 417 254 Insurance, legal and professional 81 75 Rents and local taxes 759 680 Energy and other utilities 356 282 Marketing and advertising 90 Depreciation 123 115 Total expenses 1,792 1.496 Operating profit 314 295 Less interest cost 12 3 Profit before taxation 302 292 Less Corporation Tax 37 3.8 Profit after taxation 265 254