Martha is the accountant of a trading business. During the past year she produced interim accounts for the six months ended 30 November 2015, and draft final accounts for the year ended 31 May 2016, as follows:

3 Current liabilities consisted entirely of trade accounts payable.
Martha informs you that the business leased additional premises from 1 December 2015, and that sales arising therefrom totalled £70,000 for the six months to 31 May 2016, with an average mark-up on cost prices of 150% being made on those goods.
Expenses relating to these additional premises totalled £21,000 for the period. Two-fifths of the closing inventory of the business was located at these premises.

Prepare a report, using appropriate accounting ratios, to explain the changes in the financial situation of the business during the year ended 31 May 2016.

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Revenue (all on credit terms) Cost of sales (Note 1) Gross profit Less Expenses Net profit Non-current assets Current assets (Note 2) Current liabilities (Note 3) Share capital Retained earnings Notes: 1 Average inventory was £14,000 during the first six months. 2 Current assets were: Inventory Accounts receivable Bank Interim accounts £ 140,000 42,000 98,000 56,000 42,000 70,000 42,000 (22,000) 90,000 30,000 60,000 90,000 30 Nov 2015 £ 16,000 24,000 2,000 42,000 Draft final accounts £ 336,000 112,000 224,000 168,000 56,000 63,000 71,000 (30,000) 104,000 30,000 74,000 104,000 31 May 2016 £ 25,000 28,000 18,000 71,000