Q1.

You are to study the following financial statements for two furniture stores and then answer the question which follow.

Financial Statements

A B

$000 $000 $000 $000

Income Statements

Sales 2,500 1,600

Opening Inventory 190 110

Add Purchases 2,100 1,220

Less Closing Inventory (220) (2,070) (160) (1,170)

Gross profit 430 430

Less;

Directors remuneration 70 120

Wages and salaries 180 130

Other expenses 14 (264) 10 (260)

Net profit 166 170

Statement of financial position

Non-current assets

Equipment at cost 264 98

Less Acc. depreciation (106) 158 (36) 62

Current Assets

Inventory 220 160

Accounts receivable 104 29

Bank 75 399 10 199

Total Assets 557 261

Share capital 200 100

General reserve 68 35

Retained profit 100 88

368 223

Current liabilities

Accounts payable 189 38

Total Capital and current liabilities 557 261

Required:

After calculating appropriate ratios, prepare a report that comments on the recent performance and financial health of the two companies.