Amsterdam Ltd and Berlin Ltd are both engaged in retailing, but they seem to take a different
Question:
Required:
Describe what this information indicates about the differences in approach between the two businesses. If one of them prides itself on personal service and one of them on competitive prices, which do you think is which and why?
Amsterdam Ltd Ratio Berlin Ltd Return on capital employed (ROCE) Return on ordinary shareholders' funds (ROSF) Average settlement period for trade receivables 20% 17% 30% 63 days 50 days 18% 21 days 45 days Gross profit margin Operating profit margin Average inventories turnover period 40% 15% 10% 10% 25 days 52 days
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Amsterdam Ltd and Berlin Ltd The ratios show that the average settlement period for trade receivables for Amsterdam Ltd is three times that for Berlin ...View the full answer
Accounting and Finance An Introduction
ISBN: 978-1292088297
8th edition
Authors: Peter Atrill, Eddie McLaney
Related Video
Return on capital employed or ROCE is a profitability ratio that measures how efficiently a company can generate profits from its capital employed by comparing net operating profit to capital employed. In other words, the return on capital employed shows investors how many dollars in profits each dollar of capital employed generates. ROCE is a long-term profitability ratio because it shows how effectively assets are performing while taking into consideration long-term financing
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