Tick Ltd and Tock Ltd both began operations on 1 January 2025. For illustrative purposes, assume that at that date their statement of financial positions was identical and that their operations during 2025 were also identical. The only difference between the two companies is that they elected to use different accounting methods as can be seen below.

(a) Calculate and interpret the following ratios for each company:
i. return on assets ii. return on ordinary equity iii. profit margin iv. current ratio v. receivables turnover vi. inventory turnover vii. debt ratio.

(b) Comment on the impact that use of different accounting methods can have on the calculation of ratios.

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Inventories Property, plant and equipment Tick Ltd Tock Ltd FIFO Straight-line depreciation Weighted average cost Diminishing-balance depreciation Summary financial information for both companies at the end of 2025 is presented below. Revenues Less: Cost of sales Gross profit Other expenses* Profit Statement of financial performance for the year ended 31 December 2025 Tick Ltd Tock Ltd $ 250 000 $ 250 000 138.000 150 000 112 000 43 000 53.000 $ 69 000 100 000 $ 47 000 *Includes finance costs of $8000. Depreciation expense was $10 000 for Tick Ltd and $20 000 for Tock Ltd. Assume no income tax. Cash Receivables Statement of financial position as at 31 December 2025 Tick Ltd Tock Ltd $ 28 000 $ 28 000 70 000 70 000 72 800 56 000 77.000 247 800 63 000 217 000 42 000 63 000 42 000 63 000 142 800 112 000 $ 247 8000 $217 000 Inventories Property, plant and equipment (net) Current liabilities Non-current liabilities Equity