Question: We have covered several ratios in this unit that users of financial statements can work with to evaluate a company's performance. However, not all ratios

  • We have covered several ratios in this unit that users of financial statements can work with to evaluate a company's performance. However, not all ratios are important for or applicable to all organizations. In particular, service organizations have different business models than manufacturing organizations. Using the company you worked with for your Unit 5 portfolio assignment, explain which financial ratios would be applicable to the company and which would not. State the reasons for your assertions. I used a small architecture firm as my example, it's a service organization. Please explain which financial ratios would be applicable to a small architecture firm. Which of these would be used:
  • Profit Margin Ratio
  • Return on Assets
  • Current Ratio
  • Quick Ratio
  • AR Turnover Ratio
  • Average Collection Period
  • Inventory Turnover Ratio
  • Average Sales Period
  • Debt to Equity Ratio

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