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Profitability ratios Makwebo Zed 2023 Industry Gross Profit Margin (GPM)=(GP/S)*100...

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Accounting

Profitability ratios
Makwebo Zed 2023
Industry
Gross Profit Margin (GPM)=(GP/S)*100
23.4%
28.5%
Operating Profit Margin (OPM)=(OP/)*100
19.6%
21.6%
Net Profit Margin (NPM)=(NP/S)*100
9.64%
11.7%
Return On Assets (ROA)=(NP/A)*100
7.96%
13.2%
Activity Ratios
Asset turnover =(S/A)
0.826 times
1.119 times
Inventory turnover=(COGS/Closing Inventory)
3.877 times
3.536 times
Average collection period =(Receivables/Sales)
40.3 days
24.4 days
Liquidity ratios
Current ratio =(CA/CL)
1.93 : 1
2.03 :1
Acid test ratio =(CA Inv)/CL
0.969 : 1
0.851 :1
Leverage or Gearing ratios
Total debt (All dedt/equity)*100
0.636
0.204
Ltd to total capitalization (LTD/(LTD+E)*100
0.487
0.059
Interest coverage =(OP/Interest expense}
4.533
21.829
The above ratios are for Makwebo Zed for 2023. Based on these ratios, prepare a report to the chairperson of the board of Makwebo Zed. Your report should clearly interpret and evaluate the information given and ncorporate limitations of ratios.

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