Simplify all the following exercises

The directors of Vapor receive a set of financial statements every month for discussion at their regular board meetings. The report for the month of February has just been prepared, along with comparative figures for the month of January. Income statements for the month of: February January EOOO EOOO Revenue 900 700 Cost of goods sold (368) (175) 532 525 Operating costs (240) (250) Profit for the month 292 275 Statements of financial position at the end of: February January Property, plant and equipment 1,898 1,500 Current assets Inventory 32 220 Trade receivables 1,010 720 Cash 12 1,042 952 2,940 2,452 Equity Share capital 1,000 1,000 Retained earnings 1,384 1,092 2,384 2,092 Current liabilities Cash 371 Trade payables 185 360 556 360 2,940 2,452 During February, Vapor paid $400,000 for an item of equipment. The payment was funded using a bank overdraft as a temporary measure. Vapor will take out a f400,000 long term loan in May. February's revenue includes a f200,000 sale to a registered charity at cost price. Apart from supporting the charity's work, this sale generated some valuable publicity for the company.Vapor's directors receive a short table of accounting ratios to accompany their monthly financial statements. The production director has suggested that this table should be extended to include the figure for return on capital employed. The finance director has replied that the return on capital employed ratio should not be calculated on a monthly basis, but should be monitored annually. (i) Calculate the following ratios for January and February, making appropriate adjustments to the figures in respect of the information provided concerning the purchase of the new equipment and the sale to the charity: gross profit margin current ratio trade receivables turnover in days trade payables turnover in days [8] (ii) Explain the reasons for the adjustments that you made in part (i) in respect of the information provided concerning the purchase of the new equipment and the sale to the charity. [6] (Hii) Discuss the finance director's argument that the return on capital employed ratio should be reviewed annually, but not monthly. [6] [Total 20]An airline has been offered the opportunity to purchase an international express delivery company. The delivery company operates in the same countries as the airline. The airline's directors are considering this investment on the grounds of "strategic fit", even though the investment appears to have a negative net present value. Describe the arguments for using strategic fit to justify this investment. [5