2 of 10    Total assets 535 597 710 1115 1070 Liabilities trade creditors 35 75 100 150 200 short term debt 210 250 300 450 400 Total liabilities 245 325 400 600 600 Net assets 290 272 310 515 470 Financed by Equity 100 100 100 100 100 Share premium 190 172 210 415 370 Typical competitors achieved 35 per cent gross profit margins, 5 per cent net, and maintained a return on capital employed that varied between 12 and 18 per cent. Stock turns tended to be around  15 times a year, debtor lengths around 30 days and creditor lengths around 60. Liquidity ratios tended to be above 1.0. The market The power generator market had several segments, some were not open to Herbert Engineering. The largest sector was power station engineering for background power generation where generators were designed to supply over a million watts of power. These were manufactured by the largest engineering companies with sophisticated technology and low cost project finance and were open to international competition.  Herbert Engineering could not provide such services and was limited physically by the current production site to the smaller generator systems. Overseas, there was a substantial market in many countries for background power generation for companies and individuals, where central authority had broken down or there was limited investment in national electricity supply systems. Developing countries were the main markets here. In the more advanced economies, changes in the management of national power systems, with the introduction of privatisation, or increased competition, had led to significantly increased costs of supply to rural customers. Customers in distant rural areas would be more likely to install individual power generation systems, a trend that was well established throughout continental Europe. With the increase in the level of capital investment in many organisations, continual supply of power became more and more important. Companies with large computing facilities, or sophisticated manufacturing plants could not afford interruptions in the supply of power. Environmental and safety legislation had also strengthened the demand for  standby power systems. Companies had to make sure that they could maintain pumping systems, heat and light, as they would otherwise face large fines in addition to possible jail sentences. All these pressures created a substantial market for the supply of emergency generators. Customers included large financial services companies, wholesale and distribution outlets, medical and nursing centres, manufacturing companies with substantial investment in sophisticated equipment or involved in the movement of liquids, and a variety of agricultural and leisure centres. These customers did not demand immediate delivery of generator systems as they planned  for the integration of stand-by power systems. Credit problems in this area of the market were far less pronounced, and Herbert Engineering had not suffered any bad debts from such customers over the past 5 years.