Question 2 Match Lid and Box Lid both began operations on 1 January 2020. For illustrative purposes, assume that at that date their statement of financial positions were identical and that their operations during 2020 were also identical. The only difference between the two companies is that they elected to use different accounting methods as can be seen below. (16 marks in total, 1 mark each box) Match Ltd Box Ltd Inventories FIFO Weighted average cost Property, plant and equipment Straight-line depreciation Diminishing-balance depreciation Summary financial information for both companies at the end of 2020 is presented below. STATEMENT OF PROFIT OR LOSS for the year ended 31 December 2020 Match Box Ltd Ltd Revenues $250 000 $ 250 000 Less: Cost of sales 138 000 150 000 GROSS PROFIT 112 000 100 000 Other expenses 43 000 53 000 PROFIT $ 69 000 $ 47 000 "Includes finance costs of $8000. Depreciation expense was $10 000 for Match Lid and $20000 for Box Lid. Assume no income tax. STATEMENT OF FINANCIAL POSITION as at 31 December 2020 Match Box Ltd Ltd Cash $ 20 000 $ 20 000 Receivables 50 000 50 000 Inventories 52 000 40 000 Property, plant and equipment (net) 55 000 45 000 177 000 155 000 Current liabilities 30 000 30 000 Non-current liabilities 45 000 45 000 Equity 102 000 80 000 $177 000 $ 155 000Requirement: Calculate and interpret the following ratios for each company: Match Ltd Box Ltd i. return on assets ii. return on ordinary equity iii. profit margin iv. current ratio V. receivables turnover vi. inventory turnover Vii. debt ratio