You are to study the following financial statements for two furniture stores and then answer the question which follow.

Financial Statements

AB

$'000$'000$'000$'000

Income Statements

Sales2,5001,600

Opening Inventory190110

Add Purchases2,1001,220

Less Closing Inventory(220)(2,070) (160)(1,170)

Gross profit430430

Less;

Directors remuneration70120

Wages and salaries180130

Other expenses14(264)10(260)

Net profit166170

Statement of financial position

Non-current assets

Equipment at cost26498

Less Acc. depreciation(106)158(36)62

Current Assets

Inventory220160

Accounts receivable10429

Bank7539910199

Total Assets557261

Share capital200100

General reserve6835

Retained profit10088

368223

Current liabilities

Accounts payable18938

Total Capital and current liabilities557261

Required:

After calculating appropriate ratios, prepare report that comments on the recent performance and financial health of the two companies.