Gunge AG and Guntzel AG are both wholesale companies working in the same business segment. Given the information embedded in a number of ratios that we collected (see table below), they seem, however, to take a dif- ferent customer approach to their business.
|
Ratio
|
Gunge AG
|
Guntzel AG
|
|
Return on capital employed (ROCE)
|
14%
|
15%
|
|
Credit given
|
59 days
|
19 days
|
|
Credit obtained
|
50 days
|
47 days
|
|
Gross operating margin
|
42%
|
17%
|
|
Current ratio
|
2.4
|
1.3
|
|
Net operating margin
|
11%
|
11%
|
|
Days inventory outstanding
|
50 days
|
21 days
|
Required:
Explain what the ratios reveal with regard to the operating approach of Gunge AG and Guntzel AG. Take into account price competitiveness and customer service level.