No.4 Business A and Business B are both engaged in retailing but seem to take a different approach to this trade according to the information available. The information con- sists of a table of ratios, shown as Table 7.10. Table 7.10 Financial ratios for companies A and B Ratio Current ratio Quick assets (acid test) ratio Return on capital employed (ROCE) Return on owner's equity (ROE) Debtors collection Business A 2:1 1.7:1 Business B 20 per cent 30 per cent 1.5:1 0.7:1 17 per cent 18 per cent 21 days Creditors payment Gross profit percentage Net profit percentage Inventory turnover 63 days 50 days 45 days 40 per cent 15 per cent 10 per cent 52 days 10 per cent 25 days Required: (a) Explain briefly how each ratio is calculated. (b) Describe what this information indicates about the differences in approach between the two businesses. If one of them prides itself on personal service and one of them on competitive prices, which do you think is which, and why? Problem No.10 A worker under the Halsey method of remuneration has a day rate of Rs.12 per week of 48 hours, plus a cost of living bonus of 10 p per hour worked. He is given an 8 hours task to perform, which he accomplishes in 6 hours. He is allowed 30% of the time saved as premium bonus. What would be his total hourly rate of earnings, and what difference would it make if he was paid under the Rowan method