ACC117/106 GROUP PROJECT 2 (15%) INTRODUCTION: In this group assignment, a group of students are expected to analyse financial statements using simple financial ratios for sole proprietorship business. INSTRUCTIONS: 1. Form a group with a maximum of 4 members. 2. Answer all questions. 3. All answers must be handwritten. QUESTION: Azam Baqi, the CEO of Sua Sue Enterprise, requested you as the junior accountant to analyse the financial statements of the business using financial ratios. The following information was provided by Azam: Sua Sue Enterprise Statement of Profit or Loss for the year ended 30 June 2020 and 2021 2021 2020 Sales 284,000 165,000 Less: Return inwards (2.000) (2 000) Net Sales 282.000 163,000 Loss: Cost of goods sold Opening inventory 34.000 31.000 Purchases 75 000 67,000 Cost of goods available for sale 109 000 98,000 Less: Closing inventory (21.000) (34,000) 194,000 99,000 Gross Profit Add: Revenue 10.000 8,500 Less Expenses (84.500) (62.000) Net Profit 119-500 45,500 Sua Sue Enterprise Statement of Financial Position as at 31 June 2020 and 2021 2021 2020 Non-Current Assets Office equipment 57,000 58,000 Fixtures and fittings 10,000 11,000 Motor vehicles 106,000 107,000 Long term investment 35,000 35,000 Current Assets Closing inventory 21,000 34,000 Account receivables 26,000 9,000 Cash in hand 10,500 4,600 Bank 31,600 14,500 TOTAL ASSETS 297,100 273,100Owner's equity Capital 145,000 100,500 Add: Net profit 119,500 45,500 Less: Drawings (6,000) (1,000) Non-Current Liability 8% Loan from HHB Bank 20,000 30,000 Current Liability Account payables 18,600 38,100 Commission received in advance 60.000 TOTAL EQUITY AND LIABILITIES 297,100 273,100 Note: 1. Credit sales is 70% from total sales during the year. 2. Use 365 days in a year. Required: Based on the financial statements for the year ended on 30 June 2020 and 2021 given, calculate for both years (show all relevant workings): a) Current ratio b) Acid-test ratio c) Gross profit margin d) Net profit margin e) Return on investment f) Inventory turnover ratio 9) Average Collection period (30 marks) Interpret each of the ratios for both years. (14 marks) Compare and contrast the liquidity ratios, profitability ratios and efficiency ratios for both years. (6 marks) (Total: 50 marks)