Download the spreadsheet which shows balance sheets for
two bookstores that are competing in the same town. Fox Books is a small
firm run by a sole trader. Books Plus Ltd is a chain of bookstores in
the same county.
Complete the balance sheets by totalling the fixed and current
assets, current and long term liabilities and the capital sections.
Calculate the current and acid test ratios and the return
on capital employed.
What evidence is there on the balance sheets to suggest that Books
Plus is the larger business
Which of the two businesses should be concerned about liquidity? Explain
your answer.
Are either of the two businesses too liquid?
Which of the two businesses was more profitable over the year? Explain
your answer.
Make suggestions for the business you identified in Qu 2 as to what
they could do to improve their current financial situation. Identify
advantages and disadvantages to the policies you recommend. Choose a
strategy that you think would be the most appropriate.
