COPY AND PASTE YOUR ASSIGNMENT HERE

Solution 1
a) Calculation of different ratios:
    Ratio Name
    Formula
    Calculation
    Ratio
    Return on year end capital employed
    EBIT (14000-9800)
     4,200
    15.79%
    (EBIT/Capital employed)
    Capital employed
     26,600
     
     
     
     
     
    Net assets turnover ratio
    Net assets (41800-7200)
     34,600
     0.62
    (Net) assets/turnover)
    Turnover
     56,000
     
     
     
     
     
     
     
     
     
    Gross profit margin
    Gross profit
     14,000
    25.00%
    (Gross profit/ turnover)
    Turnover
     56,000
     
     
     
     
     
    Operating profit margin
    Operating profit
     4,200
    7.50%
    (Operating profit/ turnover)
    Turnover
     56,000
     
     
     
     
     
    Current ratio
    Current Assets
     11,200
     1.56
    (Current assets/ current liabilities)
    Current liabilities
     7,200
     
     
     
     
     
    Average inventory turnover
    Sales
     56,000
     5.49
    (Sales / inventory)
    Inventory
     10,200
     
     
     
     
     
    Trade payable payment period
    Trade payables
     5,400
     46.93
    (Trade payable/ cost of sales* 365 days)
    Cost of sales
     42,000
     
     
     
     
     
     
     
     
     
    Debt to equity
    Total liabilities
     15,200
     0.57
    (Total liabilities/ equity)
    Equity
     26,600
     
b) Financial and operating performance of the entity:
The return on capital employed determines the efficiency of the entity for the generation of net income for its shareholders on their investment and thus higher return reveal the god position. In the case, the ROCI of the organization is 15.79% whereas the industry average is 16.80%. It determines that the entity is earning less return for its shareholders as compared to industry average. Further the efficiency to utilize the assets for revenue generation is very low and it is a negative indicator of financial performance for the entity in comparison to...