4. John Lennin, CEO of Guitar Centered, has asked his new finance director, Paul McArthur, to use cross-sectional ratio analysis to assess the firm's performance in 2018. John provided Paul with six ratios for the firm for that year. Luckily, Paul has access to 2018 ratios from Steak or Shake, the restaurant company he used to work for. Paul made a comparison table for both sets of ratios (shown below). Based on his analysis Paul concluded that Guitar Centered's performance was inferior on all six ratios and that the company was not performing well. This was worrisome to Paul as the reason he left Steak or Shake earlier this year was because the restaurant company was not meeting its growth targets and analysts had predicted a grim future for the company. Paul decided he needed some fresh air and went downstairs for a walk. Word Problem Set Chapter 3 Guitar Centered Steak or Shake Current Ratio 0.91 1.21 Inventory Turnover 12 90 Avg. Collection Total Asset Period Turnover 39 0.6 4 0.7 Debt Ratio 0.7 0.5 Net profit margin 4.8% 5.6% a. Is Paul right to make such conclusions? How may he improve his analysis? Explain. b. What alternative to cross-sectional ratio analysis can Paul use to assess the firm's performance