Which of two firms management teams is doing a better job

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His refers to assessing the financial statements of a firm and determining the financial health of the firm. The primary method of assessing financial health is to calculate a series of ratios, referred to as ratio analysis.

Problem 1: Which of these two firms management teams is doing a better job? Why?
             

                  Company              A                    B

Sales                          100,000             20,000

Profits                            10,000               4000

Problem 2: A firms current ratio, or the C/R ratio is 1.4 and its profit margin ratio is 8.2%. Is the company doing well? Is it making progress?

Problem 3: WHY do we normally study TRENDS in ratios, not just the ratios themselves?

Reference no: EM132630755

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