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The following ratios are available for agricultural chemical competitors Potash Corporation of Saskatchewan(PotashCorp) and Agrium from a recent year PotashCorp Agrium Liquidity Current Ratio 1.1:1
The following ratios are available for agricultural chemical competitors Potash Corporation of Saskatchewan(PotashCorp) and Agrium from a recent year | ||||||
PotashCorp | Agrium | |||||
Liquidity | ||||||
Current Ratio | 1.1:1 | 2.1:1 | ||||
Acid-test | 0.8:1 | 1.2:1 | ||||
Receivables turnover | 10.7 times | 8.3 times | ||||
Inventory turnover | 6.8 times | 4.1 times | ||||
Oeprating cycle | 88 days | 133 days | ||||
Solvency | ||||||
Debt to total assets | 36.6% | 26.9% | ||||
Interest coverage | 18.3 times | 63.1 times | ||||
Profitability | ||||||
Gross profit margin | 49.20% | 28.00% | ||||
Profit margin | 35.40% | 9.80% | ||||
Asset turnover | 0.6 times | 1.2 times | ||||
Return on assets | 19.40% | 11.60% | ||||
Return on equity | 42.40% | 25.90% | ||||
a) Which company is more liquid? Explain your answer. | ||||||
b) Which company is more solvent? Explain your answer. | ||||||
c) Which company is more profitable? Explain your answer. |
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