Following are the financial statements of Spark, a supermarket company:

Required:

a) Using the financial statements above, calculate the following ratios for the years 2017 and 2018.

• Inventory days

• Operating Cash Cycle

• ROE

• Current ratio

• Interest cover ratio

• Gearing ratio

b ) How does the performance of Spark compare to the performance of their competitor Panda given the following information for Panda:

c) Discuss how principles-based (rather than rules-based) accounting standards aim to protect investors from accounting scandals.

2017 Income Statement ( millions) Total revenues 2018 82,764 64,912 81,840 63,969 Less: Cost of sales Gross profit Operating expenses Labour costs 17,852 17,871 7,699 5,795 1678 15,172 7,843 6,126 7 12 Sales, general and administrative expenses Depreciation, amortization and provisions 15,681 2,171 Less: Total operating expenses 2,699 2,588 (417) 1,002 944 1755 604 425 Less: Other expenses Operating income before tax Less: Operating Tax Less: interest expense 757 Net Profit (2.176 726 2018 2016 Balance Sheet ( million) Goodwill 2017 8,740 966 13,770 1,433 1,532 2,236 28,677 6,848 11,829 11,473 Other intangible assets Property, Plant and Equipment 1,075 15,299 1,542 1,558 Non-current investments 1,369 2,005 32,263 6,607 2,336 Deferred tax Long term receivables 33,440 6,994 2,555 Total non-current assets Inventories Trade receivables Current investments 4,065 988 3,779 Tax receivables 3,852 964 3,300 Prepaid expenses 3,849 526 20,210 53,650 253 19,290 51,553 2,158 16,800 Assets held for sale 19,254 47,931 Total current assets Total assets Short term loans Suppliers and other payables Tax payables Other liabilities, Short term 15,362 16,796 1,325 2,747 4,154 27,184 1,298 7,267 Liabilities held for sale 26,097 9,523 734 28,481 10,365 Total current liabilities 9,794 689 Long term loans Retirement provisions 2,946 1,005 14,208 1,927 Other provisions Deferred tax liabilities 1,088 13,498 40,682 10,073 798 1,053 14,606 43,087 9,584 Total non-current liabilities 40,305 Total liabilities Shareholders' equity 1,009 979 Reserves 47,931 51,553 Total liabilities and 53,650 shareholders' equity 2018 2017 18.5% 9.1 days 24.8 days 43.5 days 0.47 0.17 ROE 17.2% 7.40 days 23.2 days 42 days 0.48 Receivable Days Inventory Days Pavables Davs Current ratio 0.22 4.46 times Quick ratio 4.78 times Interest cover ratio Gearing ratio 63.69% 66.78%