question 2

Question 2 (60 marks) Spring Limited and Autumn Limited are in the same line of business. Their accounts for the year ended December 31, 2021 were as follows. Profit And Loss Account For the year ended December 31, 2021 Spring Limited (S) (S) 303.750 Autumn Limited (S) (S) 232,500 Sales Less: Cost Of Sales Opening Stock Add: Purchases 18,900 187,350 206,250 (56,700) 6,650 68,750 75,400 (15.000) Less: Closing Stock Cost Of Sales Gross Profit Less: Operating Expenses Net Profit 149,350 154.200 79,200 75,000 60,400 172,100 52.100 120.000 Autumn Limited (S) (5) 122,500 (21,900) 100.600 Balance Sheet As at December 31, 2021 Spring Limited ($) (S) Fixed Assets Fixed Assets At Cost 141.750 Less: Accumulated Depreciation (28,350) 113.400 Current Assets Stock 56,700 Debtors 59,600 Cash And Bank 28,300 144,600 Less: Current Liabilities Creditors (58,000) Working Capital 86,600 200,000 15,000 118,100 8,800 141.900 (22,500) 119,400 220.000 As at December 31, 2021 Spring Limited (S) (S) Autumn Limited (S) (S) Financed By: Shareholders' Equity Share Capital Retained Earnings - Opening Add: Net Profit For The Year 30,000 15,000 75,000 45,000 25,000 120,000 120,000 190,000 Long-Term Liabilities 20% Bank Loan 80,000 200,000 30.000 220,000 (a) (ii) Required: Compute the following ratios of these two companies (1) Gross profit percentage Net profit percentage (iii) Return on capital employed whereas using closing balance as capital base (iv) Debtors collection period (months) (v) Creditors payment period (months) (vi) Current ratio (vii) Acid test ratio (viii) Stock turnover rate Debts assets ratio Gearing ratio (30 marks) (b) Comment on your findings by comparing the profitability and financial position of these two companies. (30 marks) (ix) Total for this assignment is 100 marks. *** END Of The Paper ***