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Accounting Fundamentals

(d) Refer to Table 2.1. Evaluate the financial performance of PI compared to its competitors. [11] Summer 2019 Paper 21

Gross profit margin. PI has the highest GPM. This means that they have low direct costs, which could mean they have more efficient production. Working capital Is the only one of the three that has a negative working capital Which may mean they can struggle to pay their debts And not have enough money to spend on marketing. PI has a good margin which is essential for a profitable business However they may still face liquidation This depends on whether their creditors insist on immediate payment.