If an analyst wanted to compare the operating performance of two retail companies, which of the following would be most useful?
A)Current ratio
B)Operating cycle
C)Debt-to-equity
D)Gross margin percentage

Question

Quizplus · Accepted Answer

The gross margin percentage would be the most useful in comparing the operating performance of two retail companies as it measures the profitability of a company's products or services after deducting the cost of goods sold. This allows for a comparison of the efficiency of each company's cost management and pricing strategies. The current ratio and debt-to-equity ratio would be helpful in assessing a company's overall financial health, but would not provide specific insight into their operating performance. The operating cycle measures the time it takes for a company to convert its inventory into cash, which is important in assessing liquidity but again, does not provide specific information on operating performance.

If an Analyst Wanted to Compare the Operating Performance of Two