QUESTION 11 Apple Ltd and Beans Ltd have been competitors in the tomato industry for the past ten years. The following financial statements relate to the three years ended 31" December 2007, 2008 and 2009. Apple Ltd Beans Ltd 2007_2008 2009 2007 2008 2009 Gross profit margin (9) 28.9 26.5 276 312 33.8 34.8 Return on capital surplus (1) 23.2 18.5 15.7 22.5 24.6 28.0 Profit margin(96) 45 55 5.8 7.7 118 14.8 Asset turnover (times) 1.5 1.6 1.7 1.79 1.91 2.03 Gearing (%) 20.5 24.6 26,5 19,9 253 24.7 Debt Equity (1) 22.5 256 29 8 34.8 339 32.8 Interest cover (times) 6.1 6.5 72 12.6 85 92 Current ratio 1.5:1 1.2:1 1.3:1 2.98:13.1:1 3.2:1 Quick ratio 1.2:10.9:10,61 1.35:1 1.27:11. 23:1 Receivables collection period (days) 52 54 53 42.3 363 39.1 Payables payment period (days) 27 24 23 34.4 33.0 34.9 Inventory turnover (times) 806 785 82.6 1123 1275 1319 Required: a) Comment and compare the performances of Apple Beans Ltd using the ratios provided. (15 marks) b) State any three reasons why a company should be interested in the performance of its competitors.(3 marks) c) Explain the problems that are inherent when ratios are used to assess a company's financial performance. (2 marks)