RatioAmsterdam LtdBerlin LtdReturn on capital employed (ROCE)Return on ordinary shareholders' funds (ROSF)Average settlement period for trade receivablesAverage settlement period for trade payablesGross profit marginOperating profit marginAverage inventories' turnover period20%17%30%18%63 days50 days21 days45 days40%15%10%10%52 days25 daysRequired:Describe what this information indicates about the differences in approach between the twobusinesses. If one of them prides itself on personal service and one of them on competitiveprices, which do you think is which and why?

Personal services mean to focuses on the benefits of the company. These services include a higher…

Required: Describe what this information indicates about the differences in approach between the two businesses. If one of them prides itself on personal service and one of them on competitive prices, which do you think is which and why?

Required: Describe what this information indicates about the differences in approach between the two businesses. If one of them prides itself on personal service and one of them on competitive prices, which do you think is which and why?

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.3.3MBA

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Question

Ratio
Amsterdam Ltd
Berlin Ltd
Return on capital employed (ROCE)
Return on ordinary shareholders' funds (ROSF)
Average settlement period for trade receivables
Average settlement period for trade payables
Gross profit margin
Operating profit margin
Average inventories' turnover period
20%
17%
30%
18%
63 days
50 days
21 days
45 days
40%
15%
10%
10%
52 days
25 days
Required:
Describe what this information indicates about the differences in approach between the two
businesses. If one of them prides itself on personal service and one of them on competitive
prices, which do you think is which and why?

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