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

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter7: Analysis Of Financial Statements
Section: Chapter Questions
Problem 1Q: Define each of the following terms: Liquidity ratios: current ratio; quick, or acid test,...
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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

 

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