QUESTION 3 Purity Nigeria Limited is a company that produces table water. The company's Board plans...

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QUESTION 3 Purity Nigeria Limited is a company that produces table water. The company's Board plans to restructure its operations with the aim of boosting its market share and profitability. The financial results of Purity Nigeria Limited and Bench Mark Co. Ltd, which is the leader in the industry, are as follows: Operating Statement for the year ended 31st December, 2015 Revenue Variable Costs Other Costs Net Profit Purity Nigeria Limited #5,600,000 #3,500,000 #1,000,000 #1,100,000 Bench Mark Co. Ltd #9,430,000 #5,100,000 #1,800,000 #2,530,000 Summarize Statements of Financial Positions as at 31/12/2015 Non-Current Assets Freehold Land & Buildings #1,800,000 #4,100,000 Plant & Equipment #1,560,000 #1,800,000 Motor Vehicles #1,300,000 #1,600,000 Fixtures & Fittings #500,000 #700,000 Current Assets/ Current Liab. Receivables 400,000 600,000 Cash 200,000 500,000 Inventory 400,000 300,000 Payables (600,000) (500,000) Capital Employed 5,560,000 9,100,000 Financed By: Ordinary Share Capital 4,000,000 4,000,000 Reserves 560,000 700,000 Non Current Liabilities 1,000,000 4,400,000 5,560,000 9,100,000 Required: (a) Compute the following performance indices for both companies Profit Margin, Asset Turnover, Returns On Capital Employed, Current Ratio, Debt- Equity Ratio. (5 marks) (b) Compare and analyze the performance of the two companies computed in (a) above and explain what the board of Purity Nigeria Limited needs to do to achieve their objectives (7marks) (c) What other non financial measures can influence the decision of the board of Purity Nigeria Limited. (5 marks) Total 17 marks QUESTION 3 Purity Nigeria Limited is a company that produces table water. The company's Board plans to restructure its operations with the aim of boosting its market share and profitability. The financial results of Purity Nigeria Limited and Bench Mark Co. Ltd, which is the leader in the industry, are as follows: Operating Statement for the year ended 31st December, 2015 Revenue Variable Costs Other Costs Net Profit Purity Nigeria Limited #5,600,000 #3,500,000 #1,000,000 #1,100,000 Bench Mark Co. Ltd #9,430,000 #5,100,000 #1,800,000 #2,530,000 Summarize Statements of Financial Positions as at 31/12/2015 Non-Current Assets Freehold Land & Buildings #1,800,000 #4,100,000 Plant & Equipment #1,560,000 #1,800,000 Motor Vehicles #1,300,000 #1,600,000 Fixtures & Fittings #500,000 #700,000 Current Assets/ Current Liab. Receivables 400,000 600,000 Cash 200,000 500,000 Inventory 400,000 300,000 Payables (600,000) (500,000) Capital Employed 5,560,000 9,100,000 Financed By: Ordinary Share Capital 4,000,000 4,000,000 Reserves 560,000 700,000 Non Current Liabilities 1,000,000 4,400,000 5,560,000 9,100,000 Required: (a) Compute the following performance indices for both companies Profit Margin, Asset Turnover, Returns On Capital Employed, Current Ratio, Debt- Equity Ratio. (5 marks) (b) Compare and analyze the performance of the two companies computed in (a) above and explain what the board of Purity Nigeria Limited needs to do to achieve their objectives (7marks) (c) What other non financial measures can influence the decision of the board of Purity Nigeria Limited. (5 marks) Total 17 marks