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Rose-Jewel sells jewellery through retail stores throughout the country. Over the last two years it has experienced declining profitability and is wondering if this is

Rose-Jewel sells jewellery through retail stores throughout the country. Over the last two years it has experienced declining profitability and is wondering if this is related to the sector as a whole. It has recently subscribed to an agency that produces average ratios across many businesses. Below are the ratios that have been provided by the agency for Rose-Jewel's business sector based on a year end of 30 September 2019.

Return on year-end capital employed (ROCE)

168%

Net asset (total assets less current liabilities) turnover

1-4 times

Gross profit margin

35%

Operating profit margin

12%

Current ratio

125:1

Average inventory turnover

3 times

Trade payables' payment period

64 days

Debt to equity

38%

The financial statements of Rose-Jewel for the year ended 30 September 2019 are:

Income Statement

RM'000

RM'000

Revenue

56 ,000

Opening inventory

8,300

Purchases

43,900

52,200

Closing inventory

(10,200)

(42,000)

Gross profit

14,000

Operating costs

(9,800)

Finance costs

(800)

Profit before tax

3,400

Income tax expense

(1,000)

Profit for the year

2,400

Statement of financial position

RM'000

RM'000

Assets

Non-current assets

Property and shop fittings

25,600

Deferred development expenditure

5,000

30,600

Current assets

Inventory

10,200

Bank

1,000

11,200

Total assets

41,800

Equity and liabilities

Equity

Equity shares of RM1 each

15,000

Property revaluation reserve

3,000

Retained earnings

8,600

26,600

Non-current liabilities

10% loan notes

8,000

Current liabilities

Trade payables

5,400

Current tax payables

1,800

7,200

Total equity and liabilities

41,800

Prepare the equivalent ratios that have been provided by the agency for Rose-Jewel.

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