Question

	Industry	Lululime Ltd. Ratios
	2020	2020	2019	2018
Profit margin	5.81%	5.5%	5.62%	6.25%
Return on assets	8.48%	6.34%	7.79%	9.38%
Return on equity	10.10%	14.24%	15.72%	17.05%
Receivable turnover	9.31 ×	6.54x	7.8x	10x
Average collection period	35.6 days	55.8 days	46.7 days	36.5 days
Inventory turnover	5.84 ×	4x	3.9x	3.8x
Capital asset turnover	2.20 ×	1.84x	2.5x	2.72x
Total asset turnover	1.46 ×	1.14x	2.5x	1.5x
Current ratio	2.15 ×	1.45x	1.78x	2.25x
Quick ratio	1.10 ×	0.8x	0.91x	1
Debt to total Assets	40.10%	55.4%	50.4%	45%
Times interest Earned	5.26 ×	3.17x	4.75x	5.67x

should anybody Purchase Shares in Lululim?

Answer 1

No , one should not purchase shares in Lululim as when we observe the various ratios of the company the performance of the company has fallen each year. From liquidity ratios to solvency ratios to effiency ratios to profit ratios none has shown an upward trend except for inventory turnover ratio . Although a higher inventory turnover ratio is considered good but there is another facet to it . A high ITR may also indicates inadequate inventory level which may result in lower sales and hence revenue . Also the ratios vary a lot from the Industry average hence there is no point in purchasing the shares of Lululim company.