Solution-Differences in approach between the two businesses

Differences in approach between the two businesses

Reference no: EM13981343

Amsterdam Ltd and Berlin Ltd are both engaged in retailing, but they seem to take a different approach to it according to the following information:

Ratio	Amsterdam Ltd	Berlin Ltd
Return on capital employed (ROCE)	20%	17%
Return on ordinary shareholders" funds (ROSF)	30%	18%
Average settlement period for trade receivables	63 days	21 days
Average settlement period for trade payables	50 days	45 days
Gross profit margin	40%	15%
Operating profit margin	10%	10%
Average inventories turnover period	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?

Reference no: EM13981343

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Differences in approach between the two businesses

Reference no: EM13981343

Reference no: EM13981343

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