Fairfield Foods Plc is a catering establishment which also owns shops and caf. Due to increased competition the company has recently experienced declining profitability. In order to ascertain whether this is a sector-wide problem the directors wish to investigate this trend. As a result, they have acquired average ratios for the sector. Some of this equivalent ratios are shown below.

Sector averages for the year ended 30 June 2020.

Return on capital employed	18.6%
Operating profit margin	8.6%
Net asset turnover	2.01
Inventory holding period	4 days
Debt to equity	80%

The following information has been extracted from the draft financial statements of Fairfield Foods Plc for the year ended 31 December 2017.

Statement of profit or loss for the year ended 31 December 2020

	000
Revenue	201,600
Cost of sale	(140,000)
Gross profit	61,600
Operating expenses	(35,280)
Profit from operating	26,320

Extracts from the Statement of Financial position as at 31 December 2020

	000
Non-current assets	110,000
Inventory	7,920
Equity:
Equity shares of 1 each	34,000
Revaluation surplus	10,800
Retained earnings	20,960
	65,760
Non-current liabilities: 10% bank loan	28,800

Other relevant information to Fairfield Foods Plc :

In 2016, Fairfield Foods Plc acquired a popular brand name. At 31 December 2017, the brand represented 20 % of non-current assets. The remaining 80% of non-current assets comprises the property from which Fairfield Foods operates and its shops and caf. This property is owned by Fairfield Foods Plc and has no directly associated finance. The property was revalued in 2014.

In January 2018, it was decided to discount some slow-moving seasonal inventory which had selling price of a 3m. Under normal circumstances these would have a gross margin of 20%. The inventory was sold in January 2018 for 50% of what it had cost to produce. The financial statements for the year ended 31 December 2018, were authorised for issue on 15 March 2018.

Required:

To adjust the information of discounted inventories in note 2 above, and calculate 2017 sector average equivalent ratios for Fairfield Foods Plc.

Using the information calculated in (A) above, assess the financial performance and position of Fairfield Foods Plc for the year ended 31 December 2017 comparison in the sector average ratios.

Briefly consider possible limitations of the comparison between Fairfield Foods Plc and the equivalent sector average ratios.