Assignment # 7 Example | Topics and Well Written Essays - 500 words - 1

7 - Assignment Exampleb) The come up of profit generated by the ac participation per dollar of gross sales Net profit margin. It is profitability symmetry. A company should have higher grade for the ratio because it indicates high profitability.c) This ratio gives a measure of the number of long time it takes a company to collect on sales that it sells on credit Days sales outstanding. Efficiency/Asset Utilization ratio. A lower value for the ratio is favourable as a company collects cash faster from customers, it has good collection procedures.d) This ratio is used to determine how easily a company can pay interest expenses on outstanding debt Times interest earned. It is a leverage ratio. A higher value for the ratio is favourable the company has much cover for finance costs hence low business risk.e) This ratio specifies the number of days it takes for the companys inventory to be converted to sales, either as cash or accounts receivable Days in inventory. Efficiency/Asset Utilization ratio. A lower value for the ratio is more favourable as the company is converting its inventories into cash faster hence the inventory is more liquid.f) This ratio indicates how profitable a company is over on invoice period (typically 12 months) without regard to how it is financed Return on assets. Profitability ratio. A higher value for the ratio is necessary because it indicates that the company is more profitable.g) A ratio that further refines the liquidity by measuring the amount of the most liquid current assets there are to cover current liabilities Acid test ratio. It is a liquidity ratio. A company should have higher value for the ratio to be able to meet its short term obligations with lots of ease.h) This ratio compares the amount of interest-bearing debt in a companys capital structure to its total assets Debt-to-total asset ratio (leverage ratio). A lower value for the ratio is required because it indicates less leverage and less risk.i) This ratio is a measure of