With the aid of common size financial statements, analyze the performance of Tilapia Ltd and Koobi Ltd for the year Ended 31st December 2019 commenting on the effective of their market strategies.
Tilapia Ltd and Koobi Ltd are companies in the fish industry. Each of th4e companies devised several strategies to outperform the other.
Tilapia Ltd decided to do more adverts in the various social media platform, 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
GH₵ |
Koobi Ltd
GH₵ |
|
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 |
Statement of Financial Position as at 31st December, 2019
|
|
Tilapia Ltd
GH₵ |
Koobi Ltd
GH₵ |
|
Non-Current Assets |
|
|
|
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:
With the aid of common size financial statements, analyze the performance of Tilapia Ltd and Koobi Ltd for the year Ended 31st December 2019 commenting on the effective of their market strategies.
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