The Broadstores Company:

The chairman of the company states that the management of the company has performed well in a very difficult economic climate, and that increased profits have been retained within the business to finance profitable expansion.
A shareholder at the annual general meeting of the company claims that the reduction in profits and the absence of dividends prove that the management of the company is a disaster.
Assess the evidence for each point of view.

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Income statement of Broadstores Company for the year ended 31 December Revenue Cost of sales Gross profit Distribution costs Administration expenses Operating profit Finance expenses Profit before taxation Year 7 Year 8 000 000 200 Z20 (120) (131) 80 (22) (40) 18 (10) & 8 Tax on profit for year Profit after tax for the year Statement of changes in equity of Broadstores Company for the year ended 31 December 000 000 Balance at beginning of year 50 51 Profit for the year 5 A Dividends paid (4) 0 Balance at end of year 51 55