DQ: 01
Ratios provide the users of financial statements with a great deal of information about the entity. Do ratios tell the whole story How could liquidity ratios be used by investors to determine whether or not to invest in a company?
DQ: 02
Profit Margin
|
Year Ending December 2012 |
Year Ending December 2011 |
Year Ending December 2010 |
|
| Revenues | 40,000 | 35,000 | 33,000 |
| Operating Expenses | |||
| Salaries | 15,000 | 10,000 | 9,000 |
| Maintenance and Repairs | 6,000 | 9,000 | 10,000 |
| Rental Expense | 2,500 | 2,500 | 2,500 |
| Depreciation | 2,000 | 2,000 | 2,000 |
| Fuel | 4,000 | 3,500 | 2,500 |
| Total Operating Expenses | 29,500 | 27,000 | 26,000 |
| Operating Income | 10,500 | 8,000 | 7,000 |
| Sales and Administrative Expenses | 6,000 | 4,000 | 3,000 |
| Interest Expense | 2,500 | 2,000 | 1,000 |
| Net Income | 2,000 | 2,000 | 3,000 |
Above is a comparative income statement for Cecil, Inc. for the years 2010, 2011, and 2012. Calculate the profit margin for each of these years. Comment on the profit margin trend.
Most Important Ratio Journal
Reflect for a moment on the ratios (working capital, current ratio, quick ratio, debt to asset, debt to equity, times interest earned, gross margin and net margin) presented this week. If you were considering investing in a company what ratio would be the most important to you Formulate and argument to defend your position.