Shoes Ltd has operated in the retail sector for the past eight years. A summary of its financial statements for the year just ended is given below:

                     Trading and profit and loss account
                                                                    £000
Sales....................................................... 1,200
Cost of sales............................................. 740
Gross profit.............................................. 460
Expenses.................................................. 390
Interest....................................................... 12
Net profit.................................................... 58
                             Balance sheet
.................................................. £000                    £000
Fixed assets (at WDV)........................................... 700
Current assets:
Stock.......................................... 240
Debtors......................................  10
                                                      250
Less: Current liabilities:
Creditors...................................... 50
Taxation....................................... 14
Dividends.................................... 35
Bank overdraft........................... 14  
....................................................113  

Net current assets................... 137
Net total assets........................ 837
Debentures................................ 98 
................................................... 739
Financed by:
Equity capital........................... 100
Reserves................................... 639
................................................... 739

Task:
You are required to calculate the following ratios and, by comparing them with the industry averages shown below, comment upon the financial state of the company, particularly with regard to liquidity, profitability and working capital management. (Assume the opening stock for the year was £220,000 and that only 20% of sales are made on credit terms.)

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Industry average 1 ROCE 2 Gross profit margin 3 Net profit margin 4 Asset utilization 5 Stock turnover period 6 Debtors collection period 7 Creditor payment period 8 Current ratio 9 Liquid ratio 9.5% 55% 8% 1.6 times 87 days 7 days 46 days 1.5:1.0 0.3:1.0