QUESTION 1 (25 Marks) 15 Runway Ltd is a retailer of clothing. Delicate Foods Ltd is a grocery-store chain and most of their inventory items are fresh and perishable. Below are extracts from the financial statements of both companies. All figures are reported in million dollars. Financial statement extracts: Runway Ltd Delicate Foods Ltd Trade receivables 1614 w 0 Inventory 277 399 Trade payables 407 383 Total assets 2 152 1 596 Total liabilities 1 108 571 Sales 6 456 31 920 Cost of sales** 3 008 27 900 Interest income 228 1 Interest expense 174 35 Net profit after tax 517 479 Purchases 2822 31491 *All Runway Ltd's sales are made on credit: all Delicate Foods Ltd's sales are made for cash **Both companies make all purchases on credit. Runway Ltd and Delicate Foods Ltd made purchases of N$ 2 822 and N$ 31 951 respectively. REQUIRED: 1. In the context of each of their respective business lines, calculate and comparatively analyse Runway Ltd's and Delicate Foods Ltd's working capital cycles in terms of: (15 marks) (a) Days inventory on hand (b) Debtors collection period (c) Creditors payment period 2. Calculate the following ratios in respect of Runway Ltd and Delicate Foods Ltd and discuss their relative margins and efficiency (10 marks) (a) Return on equity (b) Net profit margin (c) Total assets turnover