QUESTION 1

The financial information provided below is for two companies, which operates in similar retail fields, using the same business and accounting policies

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER, 2015

Stated Capital

Capital Surplus

Income Surplus

Shareholders Interest

10% Debenture

Total Capital and Long Term Debt Represented by

Fixed Assets Current Assets

Stock

Trade Debtors Cash

GODSON LTD Million

7,000 1,300 3,700 12,000

1,100

13,100

11,260

2,440 2,480 120

NYAMEBA LTD million

9,400 700 5,740

15,840 1,280 17,120

15,700

1,940 3,320 160

1

Current Liabilities Bank Overdraft

Trade Creditors Expense Creditors

Net Current Assets

Capital Employed

420 1,940 840 3,200 1,840

13,100

400 2,640 960 4,000 1,420 17,120

5,040

5,420

COMPREHENSIVE INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2015

GODSON LTD

million Sales 14,940

NYAMEBA LTD million

11,400 7,540 3,860

1,200 580 160 1,940 1,920 900 1,020 740 280

Cost of sales Gross Profit Less Expenses

11,360 3,580

1,280 620 180 2,080 1,500 Taxation 740 Net Profit after Tax 760 Dividends 480

Selling and Distribution Administration and General Financial

Net Profit before Tax

Retained Profit You are required to:

280

2

a) Calculate for each company ANY Ten (10) ratios which you consider to appropriate for analyzing the performance and the financial strengths of the two firms.

b) Explain and comment appropriately on each of the ratios you have calculated.