Question 2 Although the owner has assessed the business performance and position by calculating the financial ratios for the past two years but he would like to know how the business is performing in the market. In order to support this panalysis , he contacted a local accountancy firm which provided some industry average ratio. These ratios are as follows: Ratios Industry average 2013 Gross profit margin 59% Net profit margin 32% ROCE 22.5% Current ratio 1.9 Acid test ratio 1.1 Receivables days 17 Creditors days 89 Inventory turnover (days) 180 Gearing ratio 10% Question 2 a) Use the industry ratios mentioned above, assess Zack Limited performance and position with in the market by suggesting the reasons? (10 marks) b) What are relevant constraints while using industry average ratios? (5 marks) c) The company has used past information and industry Information to carry performance and position analysis. What additional information can be used to support this analysis? (5 marks) (Total 20 marks) Question 2 Although the owner has assessed the business performance and position by calculating the financial ratios for the past two years but he would like to know how the business is performing in the market. In order to support this panalysis , he contacted a local accountancy firm which provided some industry average ratio. These ratios are as follows: Ratios Industry average 2013 Gross profit margin 59% Net profit margin 32% ROCE 22.5% Current ratio 1.9 Acid test ratio 1.1 Receivables days 17 Creditors days 89 Inventory turnover (days) 180 Gearing ratio 10% Question 2 a) Use the industry ratios mentioned above, assess Zack Limited performance and position with in the market by suggesting the reasons? (10 marks) b) What are relevant constraints while using industry average ratios? (5 marks) c) The company has used past information and industry Information to carry performance and position analysis. What additional information can be used to support this analysis? (5 marks) (Total 20 marks)