The following are financial statements for company A and B Income statement for the year ended...

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The following are financial statements for company A and B Income statement for the year ended 31/12/2020 Sales (credit) A 50,000 B 70,000 Cost of sales Opening inventory 9,500 10,200 Purchases on credit 11,300 15,000 Ending inventory (8.600) (12.200) (9,300) (15,900) Gross profit 37,800 54,100 Less Expenses Distribution cost (6,000) (6,500) Administrative cost (2,800) (3.100) Operating profit 29,000 44,500 Finance charges (4000) (7,300) Profit before tax 25,000 37,200 Taxation (7,000) (8,200) Profit after tax 18,000 29,000 Dividends (4,000) (8,000) Retained profit for the year 14,000 21.000 Statement of Financial Position as at 31/12/2020 A B Fixed assets Plant and Machinery 350,000 280,000 Fixtures and fittings 340,000 220,000 Motor vehicle 165.000 138.000 885,000 638,000 Current Assets Inventory 8,600 9,300 Account receivable 15,600 12,400 Cash and cash equivalent 9.000 33.200 6,000 27,700 918,200 665,700 Current liabilities Bank overdraft 32,000 21,000 Account payable 13,200 (45.200) 9.700 (30,700) 873.000 635,000 Financed by Share capital 529,000 362,000 Share premium 65,000 87,000 Accumulated profit 14,000 21,000 608,000 470,000 Long term liabilities 10% debentures 265.000 165,000 873,000 635.000 Required Compute the following ratios for A and B showing the relevant formulas i. Gross margin ii. Current ratio iii. Acid test ratio iv. Average collection period v. Average payment period List FIVE limitations of Ratio Analysis The following are financial statements for company A and B Income statement for the year ended 31/12/2020 Sales (credit) A 50,000 B 70,000 Cost of sales Opening inventory 9,500 10,200 Purchases on credit 11,300 15,000 Ending inventory (8.600) (12.200) (9,300) (15,900) Gross profit 37,800 54,100 Less Expenses Distribution cost (6,000) (6,500) Administrative cost (2,800) (3.100) Operating profit 29,000 44,500 Finance charges (4000) (7,300) Profit before tax 25,000 37,200 Taxation (7,000) (8,200) Profit after tax 18,000 29,000 Dividends (4,000) (8,000) Retained profit for the year 14,000 21.000 Statement of Financial Position as at 31/12/2020 A B Fixed assets Plant and Machinery 350,000 280,000 Fixtures and fittings 340,000 220,000 Motor vehicle 165.000 138.000 885,000 638,000 Current Assets Inventory 8,600 9,300 Account receivable 15,600 12,400 Cash and cash equivalent 9.000 33.200 6,000 27,700 918,200 665,700 Current liabilities Bank overdraft 32,000 21,000 Account payable 13,200 (45.200) 9.700 (30,700) 873.000 635,000 Financed by Share capital 529,000 362,000 Share premium 65,000 87,000 Accumulated profit 14,000 21,000 608,000 470,000 Long term liabilities 10% debentures 265.000 165,000 873,000 635.000 Required Compute the following ratios for A and B showing the relevant formulas i. Gross margin ii. Current ratio iii. Acid test ratio iv. Average collection period v. Average payment period List FIVE limitations of Ratio Analysis