Average collection period is an activity ratios.

Average collection period can

measures the amount of time take by the organisation to collect payment from its credit
buyer. In the industry average ratio the industry took 52 days to collect payment from the
debtor but in DG trading the company took 40.08 days to collect the payment from the
customer. DG trading is better than Industry average ratio as the number of days take by the
DG trading to collect payment from customer is lower. The lower the collection period, it can
decrease risk to the organisation and increase the companys money inflow.
Besides, Quick ratio is a liquidity ratio. Quick ratio demonstrates a company's capacity
to pay back its current liability from its liquid assets. According to industry average ratio, for
every RM 1 of current liability, the industry has RM 1.27 current assets to pay back their
current liabilities. According to DJ Trading, for every RM 1, the DJ trading has RM 1.47
current assets to pay back its current liabilities. DJ trading is better than the Industry average
ratio as DJ trading has higher capable to pay back its current liability compare to industry
average ratio.
Moreover, Gross profit margin is a profitability ratios. Gross profit margin show the
income generated by business from each RM 1 sales. According to industry average, the
gross profit made by the industry average is RM 0.35 for every sales of RM 1. According to
DJ trading , the gross profit made by DJ Trading is RM 0.24 for every sales of RM1. Industry
average is better than DJ trading as it has greater ratio. DG Trading can improve its gross
profit margin by reducing the discount given to customer.
Current ratio is a liquidity ratios. Current ratio is to show how a organisation is capable
to pay back its current liability when they are due. According to the industry average, the
industry has RM 1.90 of current assets to pay back its current liabilities for every RM 1 of
current liabilities. According to DG Trading, for every RM 1 of current liabilities, the DJ
Trading has RM 2.19 of current assets to pay back its current liability. GJ has higher capable
to pay its liabilities than Industry average. This is because DJ Trading has larger amount of
asset worth than the liabilities.
Assets turnover is a activity ratios. It measure the capable of the company to utilize its
assets for effectively to produce sales. According to industry average, for each RM 1 value of
whole assets, the industry is able to produce RM 3.91 of sales but according to DJ Trading ,
for each RM 1 value of whole assets, the DJ Trading is able to produce RM 2.95. Assets

turnover of DJ Trading is lower than industry average so the industry average is better than
DJ Trading.
Net profit margin is a profitability ratio. It shows the amount is left to owner after
minus expenses encounter during the time frame. In industry average, for every RM 1 of
sales, the industry made Rm0.0473 of net profit. In DJ Trading, for each RM 1 of sales, the
DJ Trading made Rm 0.0371 of Net profit. The industry average is better than DJ trading as it
has hisger ratio. DJ trading can overcome the problem by decreasing the operating expenses
by decreasing the number of labour. DJ trading aslo have to increase its sales revenue by
increasing the price of the item or selling it more.