QUESTION 1 1.1. 1.2. Briefly describe liquidity and profitability ratio. (5 marks) The following financial statements are in respect of two similar privately owned department stores located in the city centre of a major city- Statement of Financial Position Billie Jane RM000 RM000 RM000 RM000 Non-current assets Building at cost 300 440 Less: Depreciation to date (255) (220) 45 220 Equipment at cost 140 180 Less: Depreciation to date (119) (20) 21 66 90 310 Current assets Inventory Accounts receivable Bank 200 205 4 240 140 2 409 475 692 (245) 230 (252) 440 Total Assets Current liabilities Accounts payable Net Assets Financed by: Capital accounts Balance at start of year Add: Net profit Less: drawings 240 60 300 (70) 230 430 90 520 (80) 440 1.800 2,700 Statement of Comprehensive Income Revenue Less: Cost of goods sold Opening inventory Add: Purchases 300 1.300 1,600 (200) 280 2.250 2.530 (240) (1.400) 400 (2.290) 410 Less: closing inventory Gross profit Less: Depreciation Other expenses Net profit 22 318 40 280 (340) 60 (320 90 Required: a) Calculate the following ratios: i) Gross profit margin ii) Net profit margin iii) Inventory tumover iv) Current ratio (4 marks) (4 marks) (4 marks) (4 marks) b) Based upon the ratios calculated for the two businesses, comment on their performance (4 marks)