The following ratios have been calculated from the most recent financial statements for Goodman Enterprises and Kwiksave
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Question:
The following ratios have been calculated from the most recent financial statements for Goodman Enterprises and Kwiksave Limited. Both businesses operate in the retail industry.
Goodman Enterprises | Kwiksave Limited | ||||||
Average collection period | 55 days | 22 days | |||||
Gross profit margin | 39% | 13% | |||||
Average days in inventory | 46 days | 23 days | |||||
Net profit margin | 9.9% | 9.9% |
REQUIRED:
- Compare and contrast the profitability and liquidity of Goodman Enterprises and Kwiksave Limited on the basis of the ratios above.
- Explain which of the two businesses is likely to be operating in a price-competitive environment and to what extent this has impacted on their net profit margin.
Related Book For
Understanding financial statements
ISBN: 978-0136086246
9th Edition
Authors: Lyn M. Fraser, Aileen Ormiston
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