Amsterdam Ltd and Berlin Ltd are both engaged in retailing, but they seem to take a different approach to it according to the following information:

Ratio Amsterdam Ltd Berlin Ltd Return on capital employed (ROCE) 20% 17%

Return on ordinary shareholders’ funds (ROSF) 30% 18%

Average settlement period for receivables 63 days 21 days Average settlement period for payables 50 days 45 days Gross profit margin 40% 15%

Net profit margin 10% 10%

Inventories turnover period 52 days 25 days Required:

Describe what this information indicates about the differences in approach between the two businesses. If one of them prides itself on personal service and one of them on competitive prices, which do you think is which and why?