Question 2 You are the accountant of Spicy Yummy, a fast food company. The directors of yond company require you to analyze and interpret the most recent financial statements and compare its performance with those of previous year. You are presented with the following summarised accounts for Spicy Yummy. Statements of Comprehensive Income for the year ended 31 March 2019 and 2020: 31 March 2019 31 March 2020 RM'000 RM'000 Sales revenue 2,000 2.900 Cost of sales (see note below) (1.200) (1.800) Gross profit 800 1.100 Distribution costs (160) (250) Administrative expenses (200) (200) Profit from operations 440 650 (50) Finance cost 600 Profit before tax Income tax expense (44) (46) 346 554 Net profit for the period (50) 390 Note: 10% and 20% of purchases and sales were for cash respectively. Cost of sales figures are made up as follows: Year ended 31 March 2019 31 March 2020 RM'000 RM'000 Opening inventory 180 200 Purchases 1.220 1,960 1,400 2,160 Less Closing inventory (200) (360) Cost of sales 1,200 1,800 Non-current assets -cost Less accumulated depreciation Statement of Financial Position 31 March 2019 31 March 2020 RM000 RM'000 RM'000 RM 000 3.100 3.674 (1.214) (1.422) 1.886 2.252 Current assets Inventory Trade receivables Cash at bank 200 400 100 360 750 120 700 A 2.586 1,230 3,482 Capital and reserves Issued ordinary share capital Accumulated profits 1.200 1.200 368 922 1,568 2,122 Non-current liabilities 10% loan notes 500 500 Current liabilities Trade payables Sundry payables Income tax 210 260 48 380 430 50 518 L 2,586 860 CL 3,482 Required: a. For each of two years, calculate THREE (3) profitability ratios, TWO (2) liquidity ratios and THREE (3) efficiency ratios to assist you in your analysis and interpretation of Spicy Yummy's financial statements. (16 marks) b. Comment on the ratios you have calculated for both years, and suggest possible reasons for any changes. (14 marks)