The details given below are a summary of the balance sheets of four companies engaged in different industries.
|
|
A
%
|
B
%
|
c
%
|
D
%
|
|
Land and buildings
|
10
|
2
|
57
|
5
|
|
Other fixed assets
|
17
|
|
13
|
73
|
|
Stocks and work-in-progress
|
44
|
|
16
|
1
|
|
Trade debtors
|
6
|
77
|
1
|
13
|
|
Other debtors
|
11
|
|
2
|
5
|
|
Cash and investments
|
12
|
20
|
11
|
3
|
|
|
100
|
100
|
100
|
100
|
|
Capital and reserves
|
37
|
5
|
55
|
50
|
|
Creditors: over one year
|
12
|
5
|
6
|
25
|
Creditors: under one year
|
Trade
|
32
|
85
|
24
|
6
|
|
Other
|
16
|
5
|
15
|
11
|
|
Bank overdraft
|
3
|
|
|
8
|
| Total capital employed |
100 |
100 |
100 |
100 |
The activities of the four companies are as follows:
1 Operator of a chain of retail supermarkets
2 Lorry transport operator
3 Commercial bank with a network of branches
4 Contractor in the civil engineering industry
You are required to:
(a) State which of the above activities relate to which set of balance sheet details, giving a brief summary of your reasoning in each case.
(b) State what you consider to be the major limitations of ratio analysis as a means of interpreting accounting information.