Wholesaler companies, Grit Ltd. and Stone Ltd. are close competitors supplying concrete and stone aggregate to retail builder merchants.

Table 1 shows extracts from each companys final accounts for the financial year ended 30th April 2020.

Extracts from the Statements of Comprehensive Income for year ending 30th April 2020: Grit Stone

Gross profit Depreciation Other overheads Profit before interest & tax Debenture interest Audit fees Net profit before tax T axation Ordinary dividend Retained profit for year

grit stone

'000 '000

sales 11,200 9,750

cost of good sold 8,460 6,825

Gross profit 2,740 2,925

Depreciation 80. 60

other overheads 2,168 2,526

Profit before interest & tax 492 339

Debenture interest 40 30

Audit fees 12 10

Net profit before tax 440 299

Taxation 140 9

ordinary dividend 65 55

retained profit for the year 235 148

Statement of Financial Position as at 30th April 2020:

grit stone

Non-current assets '000 '000 '000 '000 '000 '000

(at cost less depreciation) 1,850 1,430

Current Assets 640 490

Inventory 640 1080

Accounts Receivable 1230 120

Cash 80

Total current assets 1,950 1,690

Total assets 3,800 3,120

Capital

Ordinary Shares (1 each) 800 800

Capital Reserves 1,245 875

Total Capital 2,045 1,675

Non-current liabilities

5% Debentures 800 600

Current liabilities

Bank Overdraft 110 80

Accounts Payable 750 690

Taxation 30 20

Proposed dividends 65 955 55 845

Total Capital and Liabilities 3,800 3,120

2019 was:

80 690 20 55

additional information

1. The value of inventory held on 1st May Grit: 700,000 Stone: 650,000

2. All inventory is purchased on credit. 3. All sales are transacted on credit.

3. On 30th April 2020 the market share price was: Grit: 1.60 per share Stone: 1.50 per share

Calculate the following ratios for each company:

1. Return on capital employed (ROCE)

2. Gross profit margin

3. Net profit margin

4. Volume of trade

5. Acid test ratio

6. Inventory turnover in days

7. Debtors (i.e. trade receivables) collection period

8. Creditors (i.e. trade payables) payment period

9. Price/Earnings (P/E) ratio

10. Gearing Ratio.