Chapter 11
Financial Statement Analysis
560
Required
a) Calculate each ratio listed below for each company and indicate which company is better
for each one.
Chicken Inc.
Egg Inc.
Which company
is better?
Gross Profit Margin
EBIT
EBIT Percentage to Sales
Net Profit Margin
Return on Equity (ROE)
Return on Assets (ROA)
Asset Turnover
Current Ratio
Quick Ratio
Debt-to-Equity Ratio
Debt-to-Assets Ratio
Days-Sales-Outstanding
Accounts Receivable Turnover
Inventory Days on Hand
Inventory Turnover
b) Examining all of the ratios, explain which company has a stronger financial position in
regards to the following categories.
i.
Profitability
ii. Liquidity
