CASE NO #01

Mr. Hilal is a trade supplier who has been approached by Liwa Trading LLC which is requesting credit terms for the first time. Their managing director has provided Mr. Hilal with the following extracts from the final accounts for the past two years and Mr. Hilal has approached you for advice.

Details	2021 (OMR)	2022 (OMR)
Creditors	65,000	75,000
Revenue	590,000	940,000
Premises	30,000	22,000
Cost of sales	400,000	350,000
Machinery	3,150,000	3,128,000
Inventory	50,000	80,000
Operating expenses	192,000	170,000
Non - operating expenses	25,000	15,000
Equity share capital	550,000	550,000
Debentures/Bonds	95,000	90,000
Retained earnings	70,000	90,000
Bank	(5,000)	75,000
Accounts Receivables	50,000	85,000
Long-term loan	100,000	70,000
Shareholders fund	770,000	800,000
Cash	100,000	75,000
Prepaid expenses	1,500	1,200

Being a student of financial management course, evaluate and compare the Profitability and Liquidity performance of Liwa Trading LLC using the tools (ratio analysis) for the two years given in the above information?

You are required to offer an advice to Mr. Hilal based on your calculations with regards to the viability of engaging in a credit relationship with Liwa Trading LLC. Justify with logical reasons.