Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

تمرين 4

Analyzing an Investment by Comparing Selected Ratios
You have the opportunity to invest $10,000 in one of two companies from a single industry. The only information you have follows. The word high refers to the top third of the industry; average is the middle third; low is the bottom third.

Required:
Which company would you select Write a brief explanation for your recommendation.
TIP: When interpreting ratios, think about how they are related to one another. For example, the current ratio and the inventory turnover ratio both include the Inventory balance. This means that the low inventory turnover ratio can help you to interpret the high current ratio.