40 The following ratio calculations are based on three years of financial statements and are compared to the industry standards. The retail company has had some growth during this period but has found that its profitability is less than satisfactory Examine the ratios to identify possible reasons for the profitability concems. Industry 20XX 20XW 20XV Profit margin 4.3 % 4.0% 3.5% 4.2% Return on assets 6,4% 5.6% 4.8% 3.9% 11.2 % Return on equity Gross margin 9.8% 7.7% 13.7% 43 % 43 % 43 % 40 % Receivables turnover 7.8x 7,93x 8.1x 7.3x 47 days Average collection period Inventory turnover 46 days 45 days 50 days 8.1x 8.23x 8.3x 8.3x Capital asset turnover 3.3x 3.03x 2.7x 3.5x Total asset turnover.. 1.3x 1.23x 1.1x 1.5x Current ratio. 2.2 2.3 2.3 2.1 Quick ratio 1.9 2.0 2.0 1.7 Debt to total assets. 50 % 50 % 50 % 54 % Times interest earned 8.1x 8.23x 8.1x 7.2x Fixed charge coverage 5.5x 4.53x 4.0x 5.1x