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

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:

1. Compare and contrast the profitability and liquidity of Goodman Enterprises and Kwiksave Limited on the basis of the ratios above.
2. 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.

Expert Answer

Answer: Sr. No. RETAILERS Average Collection In days G.P N.P Margin Average Inventory 1 Goodman Enterprises 55 39 9.90% 46 2 Kwiksave Limited 22 13 9.90% 23 Debtor collection Period :- The Good man En View the full answer