Certain items taken from the financial statements, the notes thereto and other records of Lucky Nine Ltd have been expressed as percentages of net revenue. 

Required

(a) By what percentage did the entity’s profit increase or decrease in 2025 compared with 2024? Prepare a comparative statement of financial performance (showing relevant items) including common size figures to support your answer.

(b) Calculate and comment on the average collection period for the company’s trade accounts receivable for both years, showing the basis for your calculation.

Transcribed Image Text:

Percentage of net revenue 2025 2024 Revenue (net) 100 100 Beginning inventories 30 32 Purchases (net) 60 61 Ending inventories 26 33 Selling and distribution expenses 14 12 Administrative expenses 9 10 Income tax expense 3.9 5.4 Net revenue was $600 000 in 2024; it increased by 12% in 2025. Average trade accounts receivable was $69 000 in 2025 and $66 000 in 2024. Credit sales were 75% of total revenue in both years.