The directors of the Cuttlefish Biscuit Corporation Limited have calculated a set of key accounting ratios for their biscuit manufacturing business. These are detailed in the following table, together with industry averages provided by the National Biscuit Manufacturers’ Federation.

Industry Cuttlefish average Gross profit margin 32.3% 31.6%

Operating profit margin 16.2% Ate Debtors turnover (days) 36.0 38.4 Stock turnover (days) 48.7 47.4 Creditors (days) 31.4 39.6 Gearing (debt/equity) 18.7% 29.4%

Write a brief report to the directors of Cuttlefish comparing the ratios for their company with the industry averages. Identify any areas in which you think they could make improvements.