Shown in Tables 8.1 and 8.2 are the summarized income statements for the two Indian shops for the year ended 31 December 2014, plus the summarized total capital employed as at 31 December 2014.

Required:

a) Calculate the return on capital employed, the gross profit margin, the operating profit margin, and the use of assets for the Mumbai branch. The ratios for the Delhi branch have been computed in Table 8.3.

b) Describe what Raja could report to Sam about the relative performance of each of the shops.

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Table 8.1 Summarized income statements for the two shops for the year ended 31 December 2014 Delhi Mumbai Rupees Rupees Rupees Rupees '000 '000 '000 '000 6,500 2,700 Sales Cost of sales Opening inventories 100 100 Purchases 3,840 1,900 Closing inventories 140 140 3,800 1,860 Gross profit 2,700 840 Wages 900 420 Depreciation 460 40 Rent 300 160 Other expenses 740 100 2,400 720 Operating profit 300 1,140