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RATIO INDUSTRY AVERAGES LONDI HAIR Gross profit margin 35% 25% Net profit margin 15% 10% ROI 8% 7% ROE 6% 5% EPS 160 cents 140

RATIO INDUSTRY AVERAGES LONDI HAIR
Gross profit margin 35% 25%
Net profit margin 15% 10%
ROI 8% 7%
ROE 6% 5%
EPS 160 cents 140 cents
DPS 25 cents 20 cents
P/E 6 4
Networking capital 1 451 534 1 351 434
Current ratio 2,2 2,2
Quick ratio 1,0 0,8
Inventory turnover 12,5 times 12,6 times
Average collection period 30 days 35 days
Debt ratio 12% 2%
Debt-equity ratio 16% 18%
Times interest earned ratio 25 27
Requirement:
Identify the four most problematic/weakest ratios in the table and state what steps the management needs to take to improve each of them.

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