The financial statements for Harridges Ltd are given below for the two years ended 30 June 2009 and 2010. Harridges Limited operates a department store in the centre of a small town.

Dividends were paid on ordinary shares of £65,000 and £75,000 in respect of 2009 and 2010, respectively.

Required:
(a) Choose and calculate eight ratios that would be helpful in assessing the performance of Harridges Ltd. Use end-of-year values and calculate ratios for both 2009 and 2010.
(b) Using the ratios calculated in (a) and any others you consider helpful, comment on the business€™s performance from the viewpoint of a prospective purchaser of a majority of shares.

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Harridges Ltd Income statement for the years ended 30 June 2009 2010 £000 £000 Sales revenue 2,600 (1,560) 1,040 3,500 (2,350) 1,150 (350) (200) Cost of sales Gross profit Wages and salaries (320) (260) (150) 310 Overheads Depreciation (250) 350 Operating profit Interest payable (50) 260 (50) 300 Profit before taxation Taxation (105) 155 (125) 175 Profit for the year Statement of financial position as at 30 June 2009 £000 2010 £000 ASSETS Non-current assets Property, plant and equipment 1,265 1,525 Current assets Inventories 250 400 Trade receivables 105 145 380 Cash at bank 115 735 660 Total assets 2,000 2,185 EQUITY AND LIABILITIES Equity Share capital: £1 shares fully paid Share premium 490 490 260 260 350 1,100 Retained earnings 450 1,200 Non-current liabilities Borrowings – 10% loan notes 500 500 Current liabilities Trade payables Other payables 300 375 100 110 40 485 Total equity and liabilities 2,000 2,185