Pear mobiles sells mobile phones in the UK and has provided the following financial information from her accounting records after the production of her Income Statement for the year ended 31 December Year 3.

You are to carry out an analysis of the company's financial performance in Year 3.

Notes:

i.30% of goods were sold on credit.

ii.all goods were purchased on credit.

PEAR Mobiles

Selected financial data at 31 December Year 3

#+ E Sales Revenue 152,000 Opening Inventory 5,600 Closing Inventory 6,400 Gross Profit 77,800 NET Profit for the Year 20,300 Opening Equity 80,000 Trade Payables 2,000 Trade Receivables 8,000 Property (at Cost) 60,000 Bank & Cash 2,900 (Dr) Machinery and Tools (at Cost) 55,000 Provision for Depreciation on Machinery and Tools (1 January Year 3) 7,000 Drawings 10,000 VAT 600 (Cr) Equipment (at Cost bought in year so not depreciated) 9,600 Bank Loan 2,000 Provision for Doubtful Debts (1 January Year 3) 400Ratio Year 2 Year 3 Possible Reason for Difference Rate of Inventory 10 Turnover (times) times Net Profit Ratio (%) 22 % Current ratio 2.4:1 Gearing ratio 10% Return on Equity 28% Employed Gross profit ratio Liquid ratio/Acid test ratio Non-current assets turnover