Kly: eTrutgrial Question $2$

Study the following financial statements of two companies and then answer the questions which follow. Both companies are stores selling carpets and other floor coverings; each

company has a single store in the same $10-$ygar ald custom$-$built shopping complex located on the outskirts of a major UK city.

Required:

$($a$)$ Calculate the following ratios for each of R Ltd and T Ltd:

$($i$)$ gross profit as percentage of sales;

$($ii$)$ net profit as percentage of sales;

$($iii$)$ expenses as percentage of sales;

$($iv$)$ stock tuma:w$33$

$($v$)$ rate of return of net profit on capital employed

$($for the purpose of this question only, take capital as being total of share capitals $-$

at the balance sheet date$)$;

$($vi$)$ current ratio;

$($vii$)$ acid test ratio;

$($ix$)$ creditor: purchases ratio.

$($b$)$Comment briefly on the comparison of each ratio as between the two companies. State which company appears to be the more efficient, giving what you consider to be possible reagons.