Question: Is there any validity in rule of thumb ratios for all corporations
Is there any validity in rule-of-thumb ratios for all corporations (for example, a current ratio of 2 to 1 or debt to assets of 50 percent)?
Answer to relevant QuestionsWhy is trend analysis helpful in analyzing ratios?Billy’s Crystal Stores Inc. has assets of $5,960,000 and turns over its assets 1.9 times per year. Return on assets is 8 percent. What is the firm’s profit margin (return on sales)?Baker Oats had an asset turnover of 1.6 times per year.a. If the return on total assets (investment) was 11.2 percent, what was Baker’s profit margin?b. The following year, on the same level of assets, Baker’s assets ...Jim Short’s Company makes clothing for schools. Sales in 2013 were $4,820,000. Assets were as follows:Cash................$ 163,000Accounts receivable..........889,000Inventory...............411,000Net plant and ...Omni Technology Holding Company has the following three affiliates:a. Which affiliate has the highest return on sales?b. Which affiliate has the lowest return on assets?c. Which affiliate has the highest total asset ...
Post your question