In: Accounting
Some of the key ratios for Palmerston plc and its main competitor Glebe plc are as follows.
Palmerston Glebe
Gearing 70% 10%
ROCE 25% 15%
Gross profit 40% 50%
Receivables’ collection 5 days 35 days
Payables’ payment 30 days 30 days
Explain why analysts might consider each of the ratios above to be useful. Use the ratios above to assess the financial performance and financial position of the two companies.