On 1 October 2019 Manny Kyoor and his wife formed a limited company. Kyoor Ltd, to run a beauticians business and each paid in $37500 as share capital. The bank loaned the company a further $80000 at 9% interest per annum.

At 30 September 2020 the businesss final accounts were drawn up as follows.

Trading and Profit and Loss Accounts for the year

Ended 30 September 2020

Sales and fees $350000

Less; Cost of sales

Stock bought on 1 October 2019 $ 31500

Purchases 280000

$311500

Stock at 30 September 2020 $66500 $245000

Gross Profit $105000

Less; Expenses

Rent and Rates $3950

Advertising 1750

Wages 29000

Heat and Light 5250

Interest due 7200

Depreciation 12000 $59150

Net Profit $45850

Balance Sheet as at 30 September 2020

Fixed Assets Cost Depreciation NBV

Premises $124000 $124000

Fixtures and Fittings $48000 $12000 $36000

$172000 $12000 $160000

Current Assets

Stock $66500

Debtors $21500 $88000

Amounts to be settled within one year

Creditors $21000

Interest due $7200

Bank $18950 $47150 $40850

$200850

Amount to be settled after more than one year

Long term Loan $80000

$120850

Share capital and Reserves

75000 ordinary shares of $1 $75000

Retained Profit $45850

$120850

Industry average ratios and other relevant data concerning businesses similar to Kyoor Ltd were as follows.

Gross Profit Margin 30.00%

Net Profit Margin 18.07%

Current Ratio 2.21:1

Liquid (Quick) Ratio 1.02:1

Stock Turnover Ratio 8 times

Fixed Assets to Sales 50.18%

Return on Total Assets 25.37%

Return on Net Assets 34.93%

Debtors Payment Period 25 days (365 days)

Creditors Payment Period 30 days (365 days)

1. Calculate each of the above ratios, to 2 decimal places, for Kyoor Ltd. Also calculate extended Du Pont ratio of Kyoor Lted.

2. Comment on the businesses performance in the light of the data for the industry.
3. Note. It is not sufficient to say that a ratio is higher or lower than an industry average- it must be made clear whether you think it is better or worse than the industry average and you must give reasons for your comments.