Selected ratios for three different companies that operate in three different industries (merchandising, pharmaceuticals, utilities) are reported
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Question:
Selected ratios for three different companies that operate in three different industries (merchandising, pharmaceuticals, utilities) are reported in the table below:
Ratio | Co. A | Co. B | Co. C |
Gross profit margin ratio | 18% | 53% | n.a. |
Net profit margin ratio | 2% | 14% | 8% |
Research and development to sales | 0% | 17% | 0.1% |
Advertising to sales. | 7% | 4% | 0.1% |
Interest expense to sales | 1% | 1% | 15% |
Return on assets | 11% | 12% | 7% |
Accounts receivable turnover | 95 times | 5 times | 11 times |
Inventory turnover | 9 times | 3 times | n.a. |
Long-term debt to equity | 64% | 45% | 89% |
n.a. =not applicable
Required:
Identify the industry that each of the companies, A, B, and C, operate in. Give at least two reasons supporting each of your selections.
Related Book For
Financial Statement Analysis
ISBN: 978-0078110962
11th edition
Authors: K. R. Subramanyam, John Wild
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