Quartile sells jewellery through stores in retail shopping centres throughout the country. Over the last two years it has experienced declining profitability and is wondering if this is related to the sector as whole. It has recently subscribed to an agency that produces average ratios across many businesses. Below are the ratios that have been provided by the agency for Quartile’s business sector based on a year-end of 30 June 2023.

The financial statements of Quartile for the year to 30 September 2023 are as follows:

The deferred development expenditure relates to an investment in a new process to manufacture artificial precious gems for future sale by Quartile in the retail jewellery market. 

Required:
(a) Prepare for Quartile the equivalent ratios that have been provided by the agency.
(b) Assess the financial and operating performance of Quartile in comparison to its sector averages.
(c) Explain four possible limitations of the usefulness of the above comparison.

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Return on year-end capital employed (ROCE) Net asset (total assets less current liabilities) turnover Gross profit margin Operating profit margin Current ratio Average inventory turnover Trade payables payment period Debt to equity (non-current liabilities to equity) 16.8% 1.4 times 35% 12% 1.25:1 3 times 64 days 38%