Response to the following problem:
The following is the income statement for Nikov and Co. for the year ended 31 December 2006, along with information relating to the preceding year.
Income statement for the year ended 31 December
| |
2006
£000
|
2005
£000
|
|
Sales revenue
|
420.2
|
382.5
|
|
Cost of sales
|
(126.1)
|
(114.8)
|
|
Gross profit
|
294.1
|
267.7
|
|
Salaries and wages
|
(92.6)
|
(86.4)
|
|
Selling and distribution costs
|
(98.9)
|
(75.4)
|
|
Rent and rates
|
(22.0)
|
(22.0)
|
|
Bad debts written off
|
(19.7)
|
(4.0)
|
|
Telephone and postage
|
(4.8)
|
(4.4)
|
|
Insurance
|
(2.9)
|
(2.8)
|
|
Motor vehicle expenses
|
(10.3)
|
(8.6)
|
|
Depreciation - Delivery van
|
(3.1)
|
(3.3)
|
|
- Fixtures and fittings
|
(4.3)
|
(4.5)
|
|
Operating profit
|
35.5
|
56.3
|
|
Loan interest
|
(4.6)
|
(5.4)
|
|
Profit for the year
|
30.9
|
50.9
|
Required:
Analyze the performance of the business for the year to 31 December 2006 in so far as the information allows.