Compare the two companies in the areas of liquidity, working capital management, profitability, financial leverage, and efficiency. What can you learn about these two companies? Ratio Company A Company B Current Ratio 0.91 0.83 Quick Ratio 0.29 0.24 Days’ Sales Outstanding 35 43 Inventory Turnover 6.54 12.23 Gross Margin Percentage 25.38 24.38 Return on Assets 7.61 6.26 Return on Equity 33.55 19.32 Return on Sales 4.9 8.5 Debt/Equity Ratio 158.17 73.12 Interest Coverage 11.04 10.07 Revenue per Employee 258,824 308,631

Compare the two companies in the areas of liquidity, working capital management, profitability, financial leverage, and efficiency. What can you learn about these two companies? Ratio Company A Company B Current Ratio 0.91 0.83 Quick Ratio 0.29 0.24 Days’ Sales Outstanding 35 43 Inventory Turnover 6.54 12.23 Gross Margin Percentage 25.38 24.38 Return on Assets 7.61 6.26 Return on Equity 33.55 19.32 Return on Sales 4.9 8.5 Debt/Equity Ratio 158.17 73.12 Interest Coverage 11.04 10.07 Revenue per Employee 258,824 308,631

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

9th Edition

ISBN:9781305635937

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter4: Analysis Of Financial Statements

Section: Chapter Questions

Problem 7DQ: From the Google Finance site, use the DuPont analysis to determine the total assets turnover ratio...

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From the Google Finance site, use the DuPont analysis to determine the total assets turnover ratio for each of the peer companies. (Hint ROA = Profit margin Total assets turnover.) Once youve calculated each peers total assets turnover ratio, then you can use the DuPont analysis to calculate each peers equity multiplier.
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What do these ratios tells us about Target. What impact does this analysis have on your perceptions of Target, both as a customer and as an investor or potential investor.
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5. Profitability ratios Profitability ratios help in the analysis of the combined impact of liquidity ratios, asset management ratios, and debt management ratios on the operating performance of a firm. Your boss has asked you to calculate the profitability ratios of Diusitech Inc. and make comments on its second-year performance as compared with its first-year performance. The following shows Diusitech Inc.'s income statement for the last two years. The company had assets of $4,700 million in the first year and $7,518 million in the second year. Common equity was equal to $2,500 million in the first year, and the company distributed 100% of its earnings out as dividends during the first and the second years. In addition, the firm did not issue new stock during either year. Diusitech Inc. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 2,540 2,000 1,610 1,495 127 80 1,737 803 80 723 181 542 Net Sales Operating costs except depreciation and…
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1. The Wilson Corporation has the following relationships:Sales/Total assets 2.0Return on assets (ROA) 4.0%Return on equity (ROE) 6.0%What is Wilson’s profit margin and debt ratio?
Assess the relative profitability of the company (as benchmarked with competitors) using the following ratios: gross profit margin net profit margin return on assets return on equity
DuPont system of analysis Use the following financial information for AT&T and Verizon to conduct a DuPont system of analysis for each company. Sales Earnings available for common stockholders Total assets Stockholders' equity a. Which company has the higher net profit margin? Higher asset turnover? b. Which company has the higher ROA? The higher ROE? c. Which company has the higher financial leverage multiplier? a. Net profit margin (Round to three decimal places.) AT&T Net profit margin AT&T $164,000 13,333 403,921 201,934 Verizon Verizon $126,280 13,608 244,280 24,232
Sargassum Caribbean Incorporated Balance Sheet as at December 31, 2020 Assets Liabilities Current Assets: Current Liabilities: Cash Accounts Payable 600,000 300,000 200,000 400,000 Notes Payable 900,000 1,500,000 Total Current Liabilities Accounts Receivable Inventory Total Current Assets 900,000 Fixed Assets: Long-Term Liabilities: Property, Plant & Equipment Less: Accumulated Depreciation 1,200,000 Long-Term Debt 1,000,000 Total Long Term Liabilities 200,000 300,000 300,000 Net Fixed Assets Owners' Equity: Common Stock ($1 Par) Capital Surplus Retained Earnings Total Owners' Equity 100,000 300,000 100,000 500,000 Total Assets 1,700,000 Total Liabilities & Owners' Equity 1,700,000 Sargassum Caribbean Incorporated Income Statement for Year Ending December 31, 2020 Sales 2,500,000 800,000 100,000 104,000 1,496,000 Less: Cost of Goods Sold Less: Administrative Expenses Less Depreciation Earnings Before Interest and Тахes Less: Interest Expense 20.000 1,476,000 663,000 813,000 417,000…
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Ratio	Company A	Company B
Current Ratio	0.91	0.83
Quick Ratio	0.29	0.24
Days’ Sales Outstanding	35	43
Inventory Turnover	6.54	12.23
Gross Margin Percentage	25.38	24.38
Return on Assets	7.61	6.26
Return on Equity	33.55	19.32
Return on Sales	4.9	8.5
Debt/Equity Ratio	158.17	73.12
Interest Coverage	11.04	10.07
Revenue per Employee	258,824	308,631