Western Trading plc is a limited company which uses a variety of component parts in its manufacturing

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Western Trading plc is a limited company which uses a variety of component parts in its manufacturing operations. One of the company's main suppliers has recently gone out of business and therefore Western is now seeking an alternative (and reliable) source of supply for the component parts which were previously purchased from that supplier. Two companies have been identified as potential suppliers. Both companies prepare accounts to 31 December each year and Western has obtained the following copies of each company's financial statements for the year to 31 December 2023:

For both companies, all purchases and sales are made on credit terms.


Required:
(a) Calculate three profitability ratios, two liquidity ratios, three efficiency ratios and one gearing ratio for X Ltd and for Y Ltd.
(b) Use the information that is provided by these ratios to explain to the management of Western Trading plc which of the two companies (X Ltd or Y Ltd) seems likely to be the more reliable source of supply.
(c) Identify any further information which should be obtained before a final decision is made.

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