New Century Products is a company that was founded last year.While the outlook for the company is positive,it currently has negative earnings.If you wanted to measure the progress of this firm,which one of the following ratios would probably be best to monitor given the firm's current situation?
A)Price-sales ratio
B)Market-to-book ratio
C)Profit margin
D)ROE
E)ROA

Question

Quizplus · Accepted Answer

Since the company has negative earnings, traditional profitability ratios like profit margin, ROE, and ROA are not useful. The price-sales ratio is more appropriate as it relates the company's stock price to its sales, which can be a better indicator of progress for a company with negative earnings.

New Century Products Is a Company That Was Founded Last