Working Capital - higher numbers are better Current ratio - higher numbers are better Inventory turnover -
Question:
Working Capital - higher numbers are better
Current ratio - higher numbers are better
Inventory turnover - higher numbers are better
Days in inventory - fewer days are better Accounts receivable turnover - higher numbers are better Accounts receivable average collection period - fewer days are better
Debt-to-assets ratio - higher numbers are riskier; lower numbers are safer
Times interest earned - higher numbers are better
Free cash flow - higher numbers are better
Earnings per share - higher numbers are better
Price-earnings ratio - higher ratios means the stock is more expensive; lower ratios means the stock is cheaper
Gross profit rate - higher numbers are better
Profit margin - higher numbers are better
Return on assets - higher numbers are better
Asset turnover - higher numbers are better
Payout ratio - higher numbers mean the stockholders are getting more of the earnings as dividends Return on common stockholders' equity - higher numbers are better
- Choose three ratios from above you would use to select stocks.
- Explain why you choose each ratio, including what financial characteristic it measures and how you would interpret the ratio results.
- Post your selection and explanation in the discussion board for your classmates to read
- Read your classmates postings and select two for response.
- In your response to peers, suggest an additional fourth ratio (one they did not select) they could use. Explain how using it would enhance their stock selection and how they should interpret the results of this additional ratio.
Fundamental Managerial Accounting Concepts
ISBN: 978-0078110894
6th Edition
Authors: Edmonds, Tsay, olds