Required:

Write a report to your board of directors analyzing thperformance of Cheviot Plc, comparing the results against the previous year and against the industry ave

The following are extracts from the financial statements of Cheviot Plc.

Income Statement, for the year ended 30th April 2019

2019 2018

Sales $11,200 $9,750

Cost of sales 8,460 6,825

Gross profit 2,740 2,925

Expenses:

Depreciation 560 527

Interest Expense 195 360

Rent expense 1,290 1,400

Income Tax expense 150 268

Net Income 545 370

Comparative Balance Sheet, as at 30th April 2019

2019 2018

Assets

Current Assets

Cash 80 120

A/C Receivables 1230 1080

Inventory 640 490

PPE

Equipment 1850 1430

Total Assets 3800 3120

Liabil ities:

A/C payable 750 690

Interest payable 110 80

Taxes payable 95 75

Total liabilities 955 845

Equity:

Commons shares 800 800

Long-term Bonds 800 600

Retained Earnings 1245 875

Total Liabilities and Equity 3800 3120

The following ratios are those calculated for Cheviot Plc, based on its published accounts for the previous year, and also the latest industry average ratios:

Cheviot Industry average

30th April 2018

Current Ratio 2.00 1.90

Quick Assets ratio 1.42 1.27

Inventory turnover (times) 13.90 18.30

Days sales uncollected 40 days 52 days

Accounts Payable payment period 37 days 49 days

Profit margin 3.79 3.80

Gross profit ratio 30.00 35.00

Return on Total Assets 11.85 12.00