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Study the 2017 financial statements (on page 6) of two firms, Marshalls Inc. and Security Solutions (who are fierce competitors), and then calculate the following ratios so that you can make inter-firm comparisons. To get a higher grade, make sure that for each ratio you show its respective formula and workings/calculations [arrange the ratios in a table].

a. Return on Capital Employed (ROCE)

b. NetProfitMargin(ProfitinRelationtoTurnover)

c. Asset Turnover Ratio

d. Receivable (Debtor) Days Ratio

e. Inventory (Stock) Turnover Ratio

f. Gross Profit Margin

g. Drawing upon all your knowledge of accounting and based on your calculations

above:

i. Which firm was the most efficient? Give possible reasons.

ii. Which firm was the most profitable? Give possible reasons.

Sales 2,000,000 Less: Cost of Goods Sold

Opening Stock 87,400

Purchases 890,000 655,000

Marshalls Inc. Security Solutions

2,200,000

977,400

(48,800) (90,000)

220,000

Less: Closing Stock

Gross Profit

Less: Expenses Business Rates

Commission Expense Salaries and Wages Electricity

Fuel Expense Depreciation

Postage

Van Repairs Miscellaneous Expenses

Net Profit

Non-Current Assets Factory Building

Fixtures and Fittings Vans

Machinery

Current Assets Inventory

Accounts Receivable Cash at Bank

Cash on Hand

Current Liabilities

Accounts Payable

Working Capital

Net Assets

Owner's Equity (Financed by) Capital at the Start of year

Retained Profit Less: Drawings

875,000

(928,600) (785,000)

2,500 31,000 212,200 7,200 12,500 3,300 710 1,945

1,071,400

1,415,000

15,000

45,000 350,000 9,100 17,000 3,300 920 540 4,900 7,200

(276,255) (448,060)

795,145 966,940

Marshalls Inc.

950,000 160,000 95,000 420,000

48,800

75,000 210,000 28,845 362,645

(147,500)

1,200,000 795,145 (155,000)

Security Solutions

950,000 151,000 87,000 414,000

90,000

83,000 457,000 54,000 684,000

1,625,000

1,602,000

(186,100)

215,145 497,900

1,840,145 2,099,900

1,456,960 966,940 (324,000)

1,840,145 2,099,900

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