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Use the ratios below to answer the following questions. You must support and be sure to consider all relevant ratios. A B B Profit Margin
Use the ratios below to answer the following questions. You must support and be sure to consider all relevant ratios.
A | B | B | |
Profit Margin (%) | 10.2% | 14.4% | 20.2% |
Gross Margin (%) | 36.6% | 14.3% | 24.4% |
Operating Profit Margin (%) | 15.6% | 2.3% | 21.8% |
Asset Turnover (x) | 2.8 | 2.3 | 2.4 |
Inventory Turnover (x) | 9.0 | 12.8 | 15.4 |
Days' sales in cash (days) | 5.2 | 8.2 | 13.9 |
Collection Period (days) | 28.6 | 43.2 | 31.5 |
Times interest earned (x) | 10.1 | 4.7 | 9.7 |
Current Ratio (%) | 2.8 | 0.5 | 0.4 |
Cash Flow Margin | 8.6% | -2.5% | 10.2% |
Financing Cash flow | (44,000) | 65,000 | (20,000) |
Investing Cash flow | (35,500) | (21,000) | 32,000 |
a) Which company is least liquid? Support your answer
b) Which company has the lowest A/R turnover? What is it?
c) Which company the most efficient at generating net income with its assets? What is its ROA?
d) Which company has the highest operating expenses as a percentage of sales? What is it?
e) Which company is using money from operations to purchase plant and equipment?
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