1. Harrods Limited is a London high street private fashion company. Just like many businesses, the retail industry has been affected by the recent COVID-19 pandemic. The senior management of Harrods Limited has asked you to prepare a brief report based on Table 1: Peer Comparison of key ratios provided below.

You should highlight the main areas of differences, whether favorable or unfavorable, between Harrods and their peers. You should use whichever ratios you feel help to make the key points. Marks will be given for demonstrating an understanding of what the ratio means, both to the company and the industry and what it is indicating in this particular analysis. You are not expected to have any knowledge of these companies but you should show the link between the various ratios and how they reflect the performance of the business and the industry.

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2. Discuss any THREE shortcomings of ratios as a means of analysing a companys performance. (

3. All other things remaining the same, what will be the immediate effect, if any, of the following on the specified ratios? Justify your answer.

1. Revaluation (i.e. upwards) of land and buildings on the return on capital employed and gearing ratio.

2. Overstatement of closing inventory on the gross profit margin and acid test.

Table Tools x View Design Layout Ink Comment Con Accounting 23.docx - Microsoft Word Home Insert Page Layout References Mailings Review ABC Research Translation Screentip Thesaurus Set Language Spelling & New Delete Previous Next Grammar a Translate 1 Word Count Comment Proofing Comments -> Previous Pen Balloons Final Showing Markup Show Markup Reviewing Pane Tracking Track Changes Accept Reject >> Next Eraser Compare Show Source Documents Compare Protect Document Protect Start Inking Ink Changes Table 1: Peer comparison of key ratios Year ROSE ROCE Profit margin Gross margin Liquidity ratio (x) Peer group Net Stock Debtor Creditors Current Assets Turnover Collection Payment ratio (x) Turnover (x) (x) x days days Gearing Interest Cover (x) (x % % % % % Average 6.83 33.14 24.74 36.75 4.13 16.50 4.17 25.16 1.62 0.86 87.49 -7.46 HARRODS LIMITED 2020 26.60 10.70 9.58 60.23 0.36 9.36 18.02 66.77 2.38 2.15 16.86 13.94 CARD FACTORY PLC 2020 14.44 29.44 13.81 35.92 0.96 8.30 1.54 12.13 0.74 0.18 133.09 8.76 0.97 26.31 0.71 0.59 178.71 4.64 3.94 20.25 0.98 0.78 177.64 19.21 0.03 33.40 1.35 0.63 168.43 3.83 4.08 13.82 1.08 0.45 97.73 -48.67 SGN LIMITED 2020 5.06 18.71 7.02 9.19 1.39 65.36 H.K.S. RETAIL 2020 2.98 LIMITED 91.51 46.64 9.97 15.67 55.66 WILKO RETAIL 2020 0.44 6.33 2.67 40.98 6.05 LIMITED 8.83 MUJI EUROPE 2020 -3.68 -13.96 -13.96 55.76 HOLDINGS LIMITED 3.80 4.27 FENWICK LIMITED 2020 -21.68 -9.75 -8.38 42.86 0.39 5.17 (*) subject companyData Update 9,301 (13/11/2020) Bureau van Dijk 2020 Peer group definition Closest 10 companies according to the Turnover of the subject company for the last available year (2020) amongst the standard peer group. The standard peer group is based on UK SIC: 4719 - (VL: Very Large Companies) - Other retail sale in non-specialised stores. 2.22 20.96 2.08 1.20 16.37 -53.98 + + OM Page: 5 of 7 Words: 1,731 | 91%(- U +