Take the role of an investment analyst at prudential Bache. It is your job to recommend investments
Question:
Take the role of an investment analyst at prudential Bache. It is your job to recommend investments or your clients. The only information you have are some ratio values for two companies in he pharmaceuticals industry.
Write a report to prudential Bache's investment committee. Recommend one company's stock over the other. State the reasons for your recommendation.
Ratio Healthtime Mocek Return on equity 21.5% 32.3% Return on assets 16.4% Days' sales in receivables 42 36 Inventory turnover Gross profit percentage 51 % 53% Net income as a percentage of sales 8.3 % 7.2 % Times interest earned 16
Step by Step Answer:
Before recommending one stock over the other I would do an analysis of the provided financial ratios of the two companies Return on Equity ROE Net Inc...View the full answer
Financial accounting
ISBN: 978-0136108863
8th Edition
Authors: Walter T. Harrison, Charles T. Horngren, William Bill Thomas
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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