8.1 Set out below are ratios relating to three different businesses. Each business operates within a different

Question:

8.1 Set out below are ratios relating to three different businesses. Each business operates within a different industrial sector.

Ratio A plc B plc C plc Operating profit margin 3.6% 9.7% 6.8%
Sales to capital employed 2.4 times 3.1 times 1.7 times Average inventories turnover period 18 days N/A 44 days Average settlement period for trade receivables 2 days 12 days 26 days Current ratio 0.8 times 0.6 times 1.5 times Required:
State, with reasons, which one of the three businesses is:

(a) A holiday tour operator

(b) A supermarket chain

(c) A food manufacturer.

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