Two retailers show the following financial statements for the year to 31 December 20X2.

Additional information
1. A. Ltd paid a dividend of £300,000 during the year.
2. B. Ltd paid a dividend of £400,000 during the year.
Required
a. Compute for each of the two companies:
i. One ratio relevant to an assessment of liquidity;
ii. One ratio relevant to an assessment of gearing;
iii. Three ratios relevant to an assessment of profitability and performance.
b. Summarize briefly the overall strengths and weaknesses of Company A, using each of the ratios you have computed.

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Statements of financial position as at 31 December 20X2 A. Ltd B. Ltd £000 £ 000 ASSETS Non-current assets Premises Fixtures 5,000 500 5,500 8,000 1,000 ,000 Current assets Inventory Trade receivables Bank 900 60 720 1,180 1,680 10,680 800 50 330 Total assets 6,680 EQUITY AND LIABILITIES Equity Equity shares of £1 Retained earnings Total equity Non-current liabilities Long-term loans Total non-current liabilities Current liabilities Total liabilities Total equity and liabilities 3,000 2,030 2,700 5,030 2,000 4,700 800 800 850 1,650 6,680 5,000 5,000 980 5,980 10,680 Statements of profit and loss for the year ended 31 December 20X2 C 000 £000 Revenue Cost of sales Gross proft Distribution Administration Finance costs Profit for the year 13,360 16,020 8,685) (10,090) 5,930 2,300) (2,870) 1,375 (1,670) (65)(400) 990 4,675 935