The best company that we would like to suggest for our customer to invest is Poh Kong.

First
of all, Poh Kong has higher gross profit margin than London Biscuits. This showed that Poh
Kong is efficiently using its raw materials, labor and manufacturing-related fixed assets to
generate profits. In other words, Poh Kong has higher ability to pay its operating expenses
from the pure profit after taking into account the cost of goods sold. So, Poh Kong can get a
fair profit on gross revenue, as long as it keeps overhead costs in control.
Besides, the sales ratio of Poh Kong is lower than London Biscuit. We can say that
Poh Kong has the capability in collecting its debts compared to London Biscuit. The efficient
and timely collection of customer debts is a vital part of cash flow management, so this is a
ratio which is very closely watched in many businesses (eFinanceManagement, 2014). So,
Poh Kong has more cash for being made available for other usage as it is able to receive
payments from its customer in a shorter period compared to London Biscuit. Furthermore,
Poh Kongs purchase ratio is lower than London Biscuit. The duration of time Poh Kong
takes to pay back its creditors will be shorter than London Biscuits. This is because Poh Kong
has high efficiency in collecting its debts, so it has more cash to pay back its creditors.
In additions, the current ratio of Poh Kong is higher than London Biscuit. This has
showed that Poh Kong has greater ability to pay off its short-term obligations. Poh Kong is
has higher ability to turn its products into cash and can make current debt payments. Poh
Kong has gold inventories that considered valuable which can enhance its liquidity profile. If
Poh Kong has financial needs, a portion of its gold inventory can be easily liquidated to solve
its financial problems.
Moreover, Poh Kong has lower gearing ratio compared to London Biscuit. The lower
gearing ratio indicates that Poh Kong has greater financial stability. In other words, Poh Kong
is using less borrowed fund to fund its firm business activities. There will be a lower risk for
Poh Kong to face financial problems which the company funds cannot meet the interest
payments on its debt.