Calculate the gross profit ratio, operating margin ratio, and net income margin ratio for the latest two years, and obtain the industry average ratios (if available). You may use the Mergent Online database, or another outside resource of your choice.
Analyze these ratios and discuss what each of these ratios tells you about the company’s profitability, and how it compares to the industry averages.
Note any trends in these ratios from year-to-year, and discuss your assessment of the company based on these changes.
If you were an investor, explain why you would or would not buy stock in the company.
Calculate the inventory turnover ratio and number of days’ sales in inventory for the company for the latest two years. Obtain the industry averages for these ratios and any other pertinent information from the Mergent Online database, or another outside resource of your choice, and analyze the results.
Discuss what each of these ratios tells you about the company’s efficiency in managing its inventory, and how they compare to the industry average.
Identify the major causes of any changes in these ratios, and discuss your assessment of the company based on these changes.
If you are an investor, explain whether or not you are satisfied with the company’s inventory management.
