Small Fry’s business submits to you the following financial statements:

Required: Assess:

(a) The profitability;

(b) The liquidity; and

(c) The operational efficiency of this business.

Calculate not less than two ratios on which you will base your assessment.

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Statement for income for the year ended 31.12.2012 £ Sales Inventory on 31.12.2011 Purchases Depreciation machinery Inventory on 31.12.2012 Cost of sale Gross profit Administrative expenses Distribution cost Interest on loan Profit for the year 54,500 415,000 18,000 (62,500) £ 625,000 (425,000) 200,000 (118,000) (48,000) (9,000) 25,000