This is a follow up to the answer you provided.

Thank you for the answer you provided for the below question i posted early -

see answer you provided and kindly show me the method on how you calculated the ratios.

a) Ratio

	Botshelo	Maikano
	2013	2012	2013	2012
Gross profit margin	50%	54.54%	48.39%	53.57%
Operating profit margin	30%	35.45%	33.87%	38.39%
Return on capital employed	27.27%	31.45%	39.25%	42.57%
Return on assets	14.67%	17.06%	17.89%	17.95%

b) Based on the above calculation

1) Botshelo company analysis

Compared to prior years, the company's profitability decreased in 2013. All of the profitability ratios computed above for 2013 and 2012 make it clear. The gross profit margin dropped from 54.54 percent to 50%.

With regard to sales, capital employed, and the total assets of the company, the company's profitability is declining and its cost of goods sold is rising.

2) Maikano Business/ company

In 2013, the company's profitability decreased compared to previous years, but it was still insignificant in relation to the total assets. All of the profitability ratios computed above for 2013 and 2012 make it clear. Gross profit margin decreased from 54 percent to 48 percent.

The cost of goods is increasing, and the company's profitability is declining with respect to both sales and capital employed of the company.

You are the managing director of Multiple (Pty) Ltd, a company based in Angola. Multiple is looking to penetrate the Botswana market and decides to do this via acquisition of an already operational company in Botswana. Two companies, Botshelo Ltd and Maikano Ltd are presented to you as the MD. You are more interested in the profitability of the company rather than liquidity. The following are extracts of the financial statements of the two companies for two years. Use them to answer the questions that follow.

Required: a. Calculate the following profitability ratios for both years and for each of the two companies: i. Gross profit margin. ii. Operating profit margin. iii. Return on assets. b. Based on your calculations above, comment on the profitability of the two companies.