You are to study the following financial statements for two furniture stores and then answer the questions which follow.

Required:

(a) Calculate the following ratios for each business:

i.            gross profit as percentage of sales;

ii.           net profit as percentage of sales;

iii.           expenses as percentage of sales;

iv.           inventory turnover;

v.            rate of return of net profit on capital employed (use the average of the capital account for this purpose);

vi.           current ratio;

vii.          acid test ratio;

viii.          accounts receivable/sales ratio;

ix.           accounts payable/purchases ratio.

(b) Drawing upon all your knowledge of accounting, comment upon the differences and similarities of the accounting ratios for A and B. Which business seems to be the most efficient? Give possible reasons.