Extracts of Statements of Profit or loss for the year ended 31 December 2019 Peanuts Plc 24,000 Seanuts PIC 41,000 Revenues Cost of Sales (21,000) (36,000) 5,000 Gross profit 3,000 (480) Operating expenses Operating profit (1,000) 4,000 2520 Finance charges (420) Earnings before tax 2,100 (300) (1,200) 2,800 (800) Taxation Profit for the year attributable to the owners 1,800 2,000 Extracts of the Statements of financial position as at 31 December 2019 Peanuts PIC 18,800 Seanuts PIC 15,000 Non-Current Assets Current Assets Receivables 4,000 7,200 7,400 Inventory Cash and cash equivalent 4,800 1,200 Total Assets 29,600 28,800 11,000 Equity 5,600 Non Current Liabilities 9,600 12,600 Current Liabilities 8,200 11,400 Total Equity and Liabilities 28,800 29,600 BUSI2150-E1 5 BUSI2150-E1 The following notes are relevant 1. Current liabilities include Accounts payables of 6,200 for Peanuts Plc and 7,600 was for Seanuts Plc. 2. Provided below is the industry averages at 31 December 2019 Return on Equity (ROE) Return on Assets Asset turnover ratio Gross Profit ratio Operating profit ratio Current ratio Receivables turnover Inventory turnover Payables payment period Gearing (Total debt/Total Equity) Interest Cover Industry 18% 12% 0.97 times 15% 13% 1.8:1 52 days 68 days 72 days 75% 9 times Required: a. Calculate the necessary ratio to help compare the performance between Peanut Plc and Seanut Plc. (11 marks) b. Compare the performance of the two companies with the industry and provide suggestion as to which is a better investment for the investors. (15 marks)