Bolstic company ltd is a medium-sized manufacturing company that plans to expand its production

capacity. The following are the most recent financial statements of the company:

2018 2017

GHS'm GHS'm

Sales 5,000 5,000

Cost of Sales (3,100) (3,000)

Gross Profit 1,900 2,000

Administration and Distribution expenses (400) (250)

Profit before interest and tax 1,500 1,750

Interest (400) (380)

Profit before Tax 1,100 1,370

Tax (330) (400)

Profit after Tax 770 970

Dividend (390) (390)

Profit after taxation transferred to income surplus account 380 580

Statement of financial Position

2018 2017

GHS'm GHS'm GHS'm GHS'm

Non-current assets 6,500 6,400

Current Assets

Inventory 1,170 1,000

Debtors 850 900

Cash 130 100

2,150 2,000

Current Liabilities (1,150) 1,000 (1,280) 720

7,500 7,120

10% Debentures (3,500) (3,500)

4,000 3,620

Financed By:

Capital And Surplus 4,000 3,620

Additional Information;

Average data for the business sector in which Bolstic Ltd Operates is as follows:

Gearing (book Value of Debt/book value of equity 60%

Interest Cover 4 Times

Current Ratio 2:1

Inventory Days 90 Days

Return before interest and Tax/Capital Employed 25%

Required:

Analyse and Comment on the performance of the company based on the above sector average data.