The balance sheet of Grand Limited, a wholesaler, at 31 December 1995 and 1996 were as follows:

	31-Dec
	1995	1996
	000	000	000	000
Tangible fixed assets
Cost of valuation	126,300		162,400
Aggregate depreciation	-50,000	76,300	-64,000	98,400
Current assets
Stock	12,000		15,000
Debtors	10,500		14,000
Cash	1,400		2,000
	23,900		31,000
Current liabilities
Trade creditors	6,800		9,400
Corporation tax	3,400		5,000
Proposed dividend	4,000		6,000
	14,200		20,400
Net current assets		9,700		10,600
		86,000		109,000
Loans (due for repayment 1999)		-60,000		-60,000
		26,000		49,000
Called up share capital		6,000		10,000
Share premium		1,000		3,000
Revaluation reserve		-		8,000
Profit and loss account		19,000		28,000
		26,000		49,000

The stock at 31 December 1994 was 10,000,000.

The summarized profit and loss accounts for the company for the years ended 31 December 1995 and 1996 were:

	Year ended 31 December
Sales	1995	1996
Cost of sales	000	000
Gross profit	64,000	108,000
Expenses	40,000	75,600
Net profit before tax	24,000	32,400

Required:

1. Calculate the following accounting ratios for both years:

• The gross profit percentage
• The current ratio and the quick ratio (or acid test)
• Debtors collection period in days
• Trade creditors payment period in days (based on purchases figures which are to be calculated)
• Gearing ratio.

2. Show you full workings. (10 marks)
3. Explain what you can deduce from the ratios as at 31 December 1996 and from comparing them with those for 1995. (5 marks)

(20 marks)