The higher the return on capital the better the performance. This in itself does not prove that the mark up is wrong or right. The higher the rate the better. Low rate indicates high amount of finance 'tied up' in stocks. If less that 1.0 business is in trouble.
High ratio represents finance tied up in stock and debtors.
Rule of thumb for most industries 1.5 - 2.5. A better test of a business's ability to pay its way. Reason - stock can be overvalued and not represent the 'salvage' value. Also stock may be difficult to clear quickly. This ratio should be above 1.0 Marginally less than 1.0 would not portend imminent disaster.