Identifying Relevant Ratios
Identify the ratio that is relevant to answering each of the following questions.
a.How much net income does the company earn from each dollar of sales?
b.Is the company financed primarily by debt or equity?
c.How many dollars of sales were generated for each dollar invested in fixed assets?
d.How many days, on average, does it take the company to collect on credit sales made to customers?
e.How much net income does the company earn for each dollar owners have invested in it?
f. Does the company’s net income convert into more or less cash flow from operating activities?
g. Does the company have sufficient assets to convert into cash for paying liabilities as they come due in the upcoming year?
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