Summarized in Table 8.7 is some data extracted from the accounts of three companies, all of which are in the wholesale dog food business:

REQUIRED:

a) Calculate the following ratios for all three companies:
Gross profit margin Trade payable days Trade receivable days Inventory days.

b) Comment on the ratios and suggest to management where improvements in performance may be possible.

c) Would your commentary be different if you knew that:
(i) Happy Dog Foods had an exceptionally large turnover in December 2012?
(ii) DogsRUs purchased a particularly large amount of inventory in December 2012 at an advantageous price?

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Table 8.7 For the year ended 31 December 2012 DogsRUs Fido Happy Dog Foods '000 '000 '000 '000 '000 '000 From income statement: Sales 8,200 6,200 9,500 Opening inventories 1,450 900 1,480 Purchases 6,170 4,568 5,840 7,620 5,468 7,320 Closing inventories 1,820 880 960 5,800 4,588 6,360 2,400 1,612 3,140 Gross profit From statement of financial position Trade receivables 2,220 1,020 2,980 Trade payables 1,678 730 930