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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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