Use the ratios that were calculated for a retailer, OMAKE Company, and the Industry in which it

operates.

$1.$ Provide a brief introduction on ratio analysis and its importance. $(10$ marks$)$

$2.$ Analyse these results in depth and highlight the possible strengths and$/$or weaknesses of

OMAKE Company compared to Industry. $(26$ marks$)$

$3.$ Explain the possible reasons for the deviations and what action should $($if any$)$ be taken to

remedy the situation, in a short report to the CEO of OMAKE Company. $(10$ marks$)$

Ratio: DEL Company: Industry Average:

$1.$ Gross Profit Margin $53\%55\%$

$2.$ Net Profit Margin $11\%9\%$

$3.$ ROI $13\%15\%$

$4.$ Mark$-$up margin $75\%75\%$

$5.$ Net working capital N$ $250000$ N$ $400000$

$6.$ Quick Ratio $0,7$ times $1,3$ times

$7.$ Inventory turnover $4$ times p$/$a $6$ times p$/$a

$8.$ ACP $($credit terms are $30$ days$)34$ days $30$ days

$9.$ APP $($payment terms are $60$ days$)75$ days $61$ days

$10.$ Debt Ratio $32\%35\%$

$11.$ Debt$/$Equity Ratio $20\%33\%$

$12.$ EPS $30$c $45$c

$13.$ PER $8$ times $6$ times