What does the percent return on net sales indicate

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Reference no: EM131229224

Problem -

Use the attach information solve the questions below (show formulas used when applicable.)

1) Calculate the following profitability ratios:

a) Percent return on net sales

b) Percent return on assets employed

i) What does the percent return on net sales indicate?

ii) What does the percent return on assets employed indicate?

iii) What does the change from 2009 to 2010 in the percent return on assets mean for the company?

2) The CFO wants a projection for 2011 showing a net profit margin of 25%.

What changes would have to happen for the net profit to increase?

3) What was the long term debt to equity ratio in 2009?

Ratio of Long Term Debt To Equity

What does this mean?

What is better a higher or lower ratio?                  

4) What are liquidity measures?

Choose two ratios that assist in the determination of these measures. (Show the answers for both year as well as the formula)

5) What are debt service (coverage) ratios?

What is the formula to use to determine debt service coverage?

6) The two purple tabs show the breakdown of each division in this company.

What types of items might you decide to "trend" based on the information shown? (i.e., if sales in one division declined from one year to the next, what kinds of trends might you want to start paying attention to?)

7) Describe at least two things that could happen within this company that would make it necessary for the controller to dig into the numbers and provide a write up to management. (For instance, the controller might notice that inventory has shrunk by over 50% what might he look for in the numbers and what ratios might he use to check things before alerting management).

Attachment:- Assignment.rar

Reference no: EM131229224

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