The following ratios for Best Buy Co. Inc. and its competitor GameStop Corp. were obtained from reuters.com/finance. Compare the two companies based on the following ratios:
Ratio Best Buy GameStop Corp.
Debt-to-assets ...............0.96............................. 0.90
Asset turnover ratio......... 2.78............................ 1.89
Net profit margin........... 2.71%................................. 4.29%
Required:
1. Which company appears to rely more on debt financing? Describe the ratio that you used to reach this decision, and explain what the ratio means.
2. Which company appears to use its assets more efficiently? Describe the ratio that you used to reach this decision, and explain what the ratio means.
3. Which company appears to better control its expenses? Describe the ratio that you used to reach this decision, and explain what the ratio means