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Selected data for two similar companies in the garment industry are as follows. BOB Annual sales Cost of goods sold Salary Other expenses 1,000,000 300,000
Selected data for two similar companies in the garment industry are as follows. BOB Annual sales Cost of goods sold Salary Other expenses 1,000,000 300,000 150,000 250000 1,500,000 600,000 200,000 175,000 Cash Debtors Prepayments Stocks Equipment (net) 85,000 115,000 22,000 450,000 485,000 250,000 177,000 35,000 460,000 627,000 Total current liabilities Long-term liabilities Capital and retained earnings 250,000 400,000 507,000 320,000 500,000 729,000 Required: (a) Calculate each company's net profit ratio, current ratio, quick ratio, stock turnover ratio, and debt ratio. (10 marks) (b) Which of the two companies, as judged by the preceding information, would you consider as being in a better financial position and why? (5 marks) (Total 15 marks)
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