Tilapia Ltd and Koobi Ltd are Competitors in the Fish Industry. Each of the companies devised several strategies to outperform the other. Tilapia Ltd decided to do more adverts in the various social media platforms, on television and print media in order to boost its sales. It also employed more sales agents to distribute its products. Koobi Ltd in a bid to increase its market share decided to go in for a loan to expand its operation. It also reduced its Selling Price and extended its credit period to attract more customers. Sales of GH¢800,000 and GH¢700,000 were recorded by Tilapia Ltd and Koobi Ltd respectively for the year 2018. The following financial reports were prepared for the year ended 31st December 2019. Statement of Profit or Loss for the year ended 31st December 2019 Tilapia Ltd Koobi Ltd GHȼ GHȼ Sales 1,200,000 1,250,000 Cost of sales 400,000 650,000 Gross profit 800,000 600,000 Administrative Expenses 85,000 150,000 Selling & Distribution Expenses 250,000 125,000 Interest Expenses 20,000 100,000 Profit before tax 445,000 225,000 Taxation 111,250 56,250 Net profit after tax 333,750 168,750 Statement of Financial Position as at 31st December 2019 Tilapia Ltd Koobi Ltd Non-Current Assets GHȼ GHȼ Property, Plant and Equipment 500,000 1,800,000 Investment 400,000 100,000 Total Non-Current Assets 900,000 1,900,000 Current Assets Inventory 80,000 200,000 Trade Receivables 85,000 300,000 91 days treasury bills 115,000 100,000 Bank 100,000 250,000 Total Current Assets 380,000 850,000 Total Assets 1,280,000 2,750,000 EQUITY & LIABILITIES Equity Stated Capital 500,000 500,000 Income Surplus 333,750 168,750 Total Equity 833,750 668,750 Non-Current Liabilities 10% Loan note 200,000 1,000,000 Current Liabilities Trade Payables 70,000 680,000 Accrued expenses 65,000 345,000 Tax Payable 111,250 56,250 Total Current liabilities 246,250 1,081,250 Total Liabilities 446,250 2,081,250 Total Equity and Liabilities 1,280,000 2,750,000 Required: a). With the aid of common size financial statements,
Tilapia Ltd and Koobi Ltd are Competitors in the Fish Industry. Each of the companies devised several strategies to outperform the other.
Tilapia Ltd decided to do more adverts in the various social media platforms, on television and print media in order to boost its sales. It also employed more sales agents to distribute its products.
Koobi Ltd in a bid to increase its market share decided to go in for a loan to expand its operation. It also reduced its Selling Price and extended its credit period to attract more customers.
Sales of GH¢800,000 and GH¢700,000 were recorded by Tilapia Ltd and Koobi Ltd respectively for the year 2018.
The following financial reports were prepared for the year ended 31st December 2019.
|
Statement of Profit or Loss for the year ended 31st December 2019 |
||
|
|
Tilapia Ltd |
Koobi Ltd |
|
|
GHȼ |
GHȼ |
|
Sales |
1,200,000 |
1,250,000 |
|
Cost of sales |
400,000 |
650,000 |
|
Gross profit |
800,000 |
600,000 |
|
Administrative Expenses |
85,000 |
150,000 |
|
Selling & Distribution Expenses |
250,000 |
125,000 |
|
Interest Expenses |
20,000 |
100,000 |
|
Profit before tax |
445,000 |
225,000 |
|
|
111,250 |
56,250 |
|
Net profit after tax |
333,750 |
168,750 |
|
|
||
|
|
Tilapia Ltd |
Koobi Ltd |
|
Non-Current Assets |
GHȼ |
GHȼ |
|
Property, Plant and Equipment |
500,000 |
1,800,000 |
|
Investment |
400,000 |
100,000 |
|
Total Non-Current Assets |
900,000 |
1,900,000 |
|
Current Assets |
|
|
|
Inventory |
80,000 |
200,000 |
|
Trade Receivables |
85,000 |
300,000 |
|
91 days treasury bills |
115,000 |
100,000 |
|
Bank |
100,000 |
250,000 |
|
Total Current Assets |
380,000 |
850,000 |
|
Total Assets |
1,280,000 |
2,750,000 |
|
EQUITY & LIABILITIES |
|
|
|
Equity |
|
|
|
Stated Capital |
500,000 |
500,000 |
|
Income Surplus |
333,750 |
168,750 |
|
Total Equity |
833,750 |
668,750 |
|
Non-Current Liabilities |
|
|
|
10% Loan note |
200,000 |
1,000,000 |
|
Current Liabilities |
|
|
|
Trade Payables |
70,000 |
680,000 |
|
Accrued expenses |
65,000 |
345,000 |
|
Tax Payable |
111,250 |
56,250 |
|
Total Current liabilities |
246,250 |
1,081,250 |
|
Total Liabilities |
446,250 |
2,081,250 |
|
Total Equity and Liabilities |
1,280,000 |
2,750,000 |
Required:
a). With the aid of common size financial statements,
- b) Analyze the performance of Tilapia Ltd and Koobi Ltd for the year Ended 31st December 2019 commenting on the effective of their market
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