Below are selected ratios provided for the current year for two companies in the fast food industry, Yellow Ltd. and Blue Ltd. : Yellow Blue Basic earnings per share $0.98 $1.37 Current ratio 2.2:1 2:1 Debt to total assets 56% 72% Gross profit margin 78.8% 60.0% Inventory turnover 5.8 times 9.9 times Price-earnings ratio 14.3 times 20.3 times Profit margin 9.3% 22.2% Receivables turnover 9.8 times 10.4 times Return on assets 9.3% 10.2% Times interest earned 12.3 times 6.9 times Required - fill in the blanks with your answers for the following: a) Which company is more profitable? What ratio is best used to determine this? e b) Which ratio is used to assess inventory management? Which company is managing their inventory better? Profit margin 9.3% 12.2% Receivables turnover 9.8 times 10.4 times Return on assets 9.3% 10.2% Times interest earned 12.3 times 6.9 times Required - fill in the blanks with your answers for the following: a) Which company is more profitable? 6. What ratio is best used to determine this? b) Which ratio is used to assess inventory management? Which company is managing their inventory better? c) Which company do investors appear to believe has greater prospects for future growth (e.g. stock price appreciation)? . Which ratio is best used to come to this conclusion? d) Which company appears to be more solvent? Which of the following ratios is best used to determine this? Times interest earned 12.3 times 6.9 times Required - fill in the blanks with your answers for the following: a) Which company is more profitable What ratio is best used to determine this? Yellow Blue b) Which ratio is used to assess inventory management? . Which company is managing their inventory better? c) Which company do investors appear to believe has greater prospects for future growth (e.g. stock price appreciation)? Which ratio is best used to come to this conclusion? . . Which of the following ratios is best used to d) Which company appears to be more solvent? determine this? Next page 18 sty A MacBook Air BO 888 DIN F2 F3 F G F5 FB @ # 3 $ 4 2 % 5 & 7 6 8 9 Return on assets 9.3% 10.2% Times interest earned 12.3 times 6.9 times Required - fill in the blanks with your answers for the following: a) Which company is more profitable? . . What ratio is best used to determine this? ess inventory management? Which company is Receivables turnover Gross profit margin Profit Margin Basic earnings per share Current Ratio ter? ors appear to believe has greater prospects for future growth (e.g. stock price Which ratio is best used to come to this conclusion? appreciation)? d) Which company appears to be more solvent? Which of the following ratios is best used to determine this
