QUESTION $1$

$1.$ R Plc is one of the major food retailers in Zimbabwe with a listing on the Zimbabwe Stock Exchange. Its $2023$ and $2022$ Statements of Profit$/$loss and Other Comprehensive Income and Statements of Financial Position are shown below:

Statement of Profit$/$Loss and Other Comprehensive Income for the Year Ending $31$st December

$20232022$

$$000$ $$000$

Sales $9000080000$

Cost of Sales $(70000)(63000)$

Gross Profit $2000017000$

Net Profit for the year $45003900$

Dividends $(500)(500)$

Profit Retained $40003400$

R Plc

Statement of Financial Position as at $31$st December

$20232022$

$$000$ $$000$

Assets

Non$-$Current Assets $325000295000$

Current Assets

Inventory $30002900$

Trade Receivables $32003000$

Cash & Cash Equivalents $6000053000$

Current Assets $6620058900$

Total Assets $391200353900$

Equity & Liabilities

Equity

Ordinary Share Capital $-$ $$1\mathrm{.}00$ each $2000020000$

Retained Profit $275500271500$

Total Equity & Reserves $295500291500$

Non$-$Current Liabilities

LongTerm Debt $7070038400$

Total Non$-$Current Liabilities $7070038400$

Current Liabilities

Trade Payables $1500012000$

Bank Overdraft $00$

Taxation $50007000$

Accrued Expenses $50005000$

Total Current Liabilities $2500024000$

Total Equity & Liabilities $391200353900$

Notes $20232022$

Current Share Price per share $15\mathrm{.}0013\mathrm{.}00$

In $2023,$ the industry averages for the relevant ratios for the food retail sector are as follows:

Food Retail

Current Ratio $2\mathrm{.}1$:$1$

Acid or Quick Ratio $2\mathrm{.}2$:$1$

Trade Receivable Days $15$ Days

Trade Payable Days $60$ Days

InventoryTurnover Days $20$ Days

Required:

$($a$)$ Using suitable ratio analysis and discussion, assess the profitability, liquidity and efficiency of R Plc from $2022$ to $2023.(32$ Marks$)$

$($b$)$ At a recent accountancy conference you attended, the following argument was made by a presenter:

$$In the airline industry, the closing year$-$end balances for inventories and trade receivables are very small and for non$-$current assets are very large relative to the overall size of their statement of financial position.$$

Required:

Comment on the above claim and explain, with reasons, whether you agree or disagree with this statement. $(8$ Marks$)$

Total: $40$ marks