D2 – Assessment the economic efficiency and place of BB for 2014 using rate research (suitable ratio)

Introduction
In this task, I am required to assess the economic efficiency and position of BB for 2014 using rate research that is an appropriate for the panel of administrators of BB. I will be looking at BB enterprise and the competitors figure using industry average. Name of Ratio | Type of Ratio | BB enterprise | Competitor | Industry Average | Gross Profit Margin | Profitability | 43% | 62.25% | 54% | Net Profit Margin | Profitability | 30% | 20% | 25% | ROCE | Profitability | 58% | 30% | 36% | Current Ratio | Liquidity | 2.5:1 | 2.8:1 | 2.5:1 | Acid Test | Liquidity | 1.58:1 | 1.2:1 | 2:1 | Stock Turnover Period | Efficiency | 89 days | 55 days | 50 days | Debtor’s Payment Period | Efficiency | 39 days | 60 days | 50 days | Creditor’s Payment Period | Efficiency | 82 days | 80 days | 70 days |

Probability ratio formula
Gross profit margin
Gross profit x 100
Sales
147,820 x 100
340,500
43%

Net profit margin
Net profit x 100
Sales
103,630 x 100
340,550
30%

Return of capital income
Net profit before interest and tax x 100

Capital employed
103,630 x 100
178,630
58%
Gross profit margin
Gross profit margin
Looking at the numbers for BB, the numbers recommend that gross profit margin is 43%. This implies that for every £1 item sales for BB, 43p is being created as total benefit. However, looking at the competitors of BB, the numbers recommend that the total benefit edge 62.25%. This implies that for every £1 item sales for BB opponents, 62p is being created as total benefit.
Comparison to BB and BB’s competitor’s, you can condition that BB is not creating enough item sales whereas however, BB’s competitors are creating a lot of item sales, as the market regular is 54%. This implies