Calculate profitability and asset management ratios using sales and receivables data.} - Because sales revenue is such
Question:
Calculate profitability and asset management ratios using sales and receivables data.}
- Because sales revenue is such a key component of a company's success, analysts are interested in a large number of ratios that incorporate sales.
- Many of these ratios attempt to measure how much profit the company is making on sales. These ratios are called profitability ratios and include:
- gross profit margin
- operating margin
- net profit margin
- Analysts are also concerned with asset management. Asset management refers to how efficiently a company is using the resources at its disposal.
- Two of the most widely used asset management ratios are accounts receivable turnover and the average collection period ratios.
Step by Step Answer:
Cornerstones Of Financial Accounting
ISBN: 9780176707125
2nd Canadian Edition
Authors: Jay Rich, Jefferson Jones, Maryanne Mowen, Don Hansen, Donald Jones, Ralph Tassone