Of the five profitability ratios covered in the text, which one do you believe provides the most value to a potential investor? Do you think this depends on the company’s industry? Why or why not?
1. Profit Margin Analysis
2. Effective Tax Rate
3. Return on Assets
4. Return on Equity
5. Return on Capital Employed
This week you are learning how financial ratios are an important tool used to analyze a company’s performance or to compare it with the performance of competitors.
Using a company that you chose (you should consider using a company from your Group’s financial project), please discuss the following categories of financial health using 2 ratios in each:
Company is Home Depot
LIQUIDITY CAPITAL STRUCTURE EARNINGS What did those ratios tell you (what do they measure)?
Can you tell if the ratio is good or bad (what else might you need to look at or compare it to)?
What’s your Takeaway?
Word count ~ 400 and 2 to 3 references please.
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