Discussion Prompt: Profitability Ratios

NIKE

Return on Assets 8.4%

Asset Turnover 1.0 %

Gross Margin 43.8

Return on Common Shareholders' Equity 17.40%

UNDER ARMOR

Return on Assets (1.12)

Asset Turnover 1.26 %

Gross Margin 45.12

Return on Common Shareholders' Equity -2.29%

The asset turnover ratio specifies the effectiveness of a firm using its assets to generate revenue or sales. It compares the monetary amount of sales or revenues to the firm's total assets to measure the effectiveness of the company's operations.

If you had to base your decision on that ratio alone (not real life) - which company would you recommend to your client, and why?

Answer rating: 100% (QA)

Based on the asset turnover ratio alone I would recommend Nike to my ... View the full answer