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The following are key extracts from the financial statements and market data of Kings Motors PLC and its competitor LSE Motors PLC for financial years

The following are key extracts from the financial statements and market data of King’s Motors PLC and its competitor LSE Motors PLC for financial years ending 31st of December 2020 and 2021:

King’s Motors PLC

LSE Motors PLC

2020

£

2021

£

2020

£

2021

£

Revenue

26,000,000

132,000,000

Revenue

900,000,000

950,000,000

Gross Profit

15,000,000

80,000,000

Gross Profit

300,000,000

320,000,000

Operating Profit

(35,000,000)

12,000,000

Operating Profit

120,000,000

160,000,000

Interest Expense

(2,000,000)

(8,000,000)

Interest Expense

(20,000,000)

(30,000,000)

Profit for The Year

(37,000,000)

4,000,000

Profit for The Year

100,000,000

130,000,000

Trade Receivables

3,000,000

19,000,000

Trade Receivables

25,000,000

30,000,000

Inventories

5,000,000

12,000,000

Inventories

80,000,000

90,000,000

Cash

36,000,000

60,000,000

Cash

50,000,000

60,000,000

Trade Payable

5,000,000

18,000,000

Trade Payable

120,000,000

150,000,000

Long term Loan

4,000,000

35,000,000

Long term Loan

250,000,000

400,000,000

Share Capital (£100)

5,000,000

25,000,000

Share Capital (£1)

250,000,000

300,000,000

Retained Earnings

7,000,000

11,000,000

Retained Earnings

200,000,000

285,000,000

Dividends (Total Payout)

0

0

Dividends (Total Payout)

30,000,000

45,000,000

Share Price (per share)

20

100

Share Price (per share)

670

650

Cash from operations

2,000,000

6,000,000

Cash from operations

(35,000,000)

(50,000,000)

  1. Adopting the perspective of a financial analyst, evaluate the performance of King’s Motors PLC and its biggest competitor LSE Motors PLC. Please advise on which of the two companies you would invest in given the information above and why? Please state your rationale behind your chosen investment. In your answer, please also discuss what further information you might seek to support your decision.

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