QUESTION 1

You have recently been appointed as a FINANCE MANAGER of ALPHA LIMITED. The statement of profit or loss of the company for two years is as follows.

STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED DECEMBER 31:

	2017 GH	2016 GH
REVENUE	51,887.5	41,235.5
COST OF SALES	(24,146.5)	(19.230)
GROSS PROFIT	27,741	22,005.5
DISTRIBUTION COST	(11,171)	(9,314)
ADMINISTRATIVE EXPENSES	(4,216)	(3,092)
OPERATING PROFIT	12,354	9,599.5
INTEREST RECEIVED	560	209
OTHER INCOME	70.5	379.5
FINANCE COSTS	(78)	(100.5)
PROFIT BEFORE TAX	12,906.5	10,087.5
TAXATION	(3,221.5)	(2,509.5)
PROFIT FOR THE YEAR	9,685	7,578

You are required to:

a) Prepare a common size statement of the company.

b) Compute at least 4 profitability ratios from the financials provided.

c) Use your computations in (a) and (b) above to assess the performance of the company over the period for presentation to the DIRECTOR OF FINANCE.