Case: Kinston Berhad Kinson Berhad has just published its financial statements for the year ended December 31, 2021. Kinston operates a chain of 42 supermarkets in one of the six major provinces of its country of operation. During 2021 there has been speculation in the financial press that the entity is likely to be a takeover target for one of the larger national chains of supermarkets that is currently underrepresented in Kinston's province. A recent newspaper report has suggested that Kinston's directors are unlikely to resist a takeover bid. The six board members are nearing retirement and they all own significant shareholdings in the business. Kinston's directors have reassessed the useful lives of non-current tangible assets during the year. In most cases, they estimate that their useful lives have increased. The depreciation charges in 2021 have been adjusted accordingly. Six new Kinston stores have been opened during 2021, bringing the company's total to 42 supermarkets. Four key ratios for the supermarket sector (based on the latest available financial statements of 12 listed entities in the sector) are as follows: Annual sales per store: RM27.6 million Gross profit margin: 5.9% Net profit margin: 3.9% Non-current asset turnover (tangible + intangible non-current assets): 1.93 Selected financial data is provided as follows: Kinston Berhad Income Statement For the year ended December 31, 2021 In RM million 2021 2020 Revenue 1,255 1,220 Cost of sales (1,177) (1.145) Gross profit 78 75 Operating expenses (21) (29 Profit from operations 57 46 Finance cost (10) (10) Profit before tax 47 36 Income tax expense (14) (13) Profit for the period 33 23Kinston Berhad Balance Sheet As at December 31, 2021 In RM million 2021 2020 Non-current assets Property, plant and equipment 580 575 Goodwill 100 100 Total non-current assets 680 675 Current assets Inventories 47 46 Trade receivables 12 13 Cash 46 Total current assets 105 Total Assets 785 746 Equity Share capital 150 150 Accumulated profits 151 126 Total Equity 301 276 Non-current liabilities Interest-bearing borrowings 142 140 Deferred tax 25 21 Total non-current liabilities 167 161 Current liabilities Trade and other payables 297 273 Short-term borrowings 20 36 Total current liabilities 317 309 Total Liabilities 484 470 Total equity and total liabilities 785 746 Required: Analyze the financial performance of Kinston Berhad in terms of its profitability and risk aspects