Q1. The management of TGIF Limited has been concerned about the company's financial performance. The CEO is keen to identify the areas in which the company's performance has deteriorated as compared to the previous year, and for this purpose, has asked you to perform a detailed comparative financial analysis. The financial statements of TGIF Limited for two years are given below: Profit and Loss account for: Year ending Mar-19 Rs. '000 4,500 Mar-20 Rs. '000 6,000 Sales revenue Cost of goods sold: Opening inventory Purchases 500 3,000 3,500 -600 2.900 1,600 600 4,800 5,400 -1,200 4,200 1,800 Less Closing inventory Cost of goods sold: Gross profit Expenses: Sales & Admin expenses Depreciation Interest paid Total expenses Net profit 400 200 150 750 850 450 300 350 1100 700 31-Mar-19 Rs. '000 3,500 -800 2,700 31-Mar-20 Rs. 1000 5,600 1,100 4,500 Balance sheets as at: Assets: Fixed assets -cost Less: accumulated depn Net fixed assets: Current assets: Inventory Debtors Cash Total current assets Total Capital and Liabilities: Issued share capital Accumulated profits 10% Bank Loan Current liabilities: Creditors Accruals Total 600 600 100 1,300 4,000 1200 1500 300 3,000 7,500 800 900 1,500 1,000 1,600 3,500 700 100 4,000 1,300 100 7,500 Required: a. Compute the following ratios for each of the two years: Current ratio, Inventory holding period in days (use year-end figures) and Debtors collection period in days. [6 Marks] b. Compute the Return on Equity (ROE) for the two years and using the Du-Pont model, analyze the ROE into three main components. [6 Marks] c. Comment on the changes in the company's financial performance and position between the two years, stating the possible reasons for the changes. What suggestions would you offer to improve the company's performance? [3 Marks]