Ausford DQ Week 5 ACC205: Principles of Accounting I

1. RatiosRatios provide the users of financial statements with a great deal of information about the entity. Do ratios tell the whole story How could liquidity ratios be used by investors to determine whether or not to invest in a company

   Guided Response:
   Let at least two of your peers know how debt service ratios can be used by a lender in determining whether or not to lend money to a company.

2. Profit Margin
   

   	Year Ending December 2012	Year Ending December 2011	Year Ending December 2010
   Revenues	40,000	35,000	33,000
   Operating Expenses
   Salaries	15,000	10,000	9,000
   Maintenance and Repairs	6,000	9,000	10,000
   Rental Expense	2,500	2,500	2,500
   Depreciation	2,000	2,000	2,000
   Fuel	4,000	3,500	2,500
   Total Operating Expenses	29,500	27,000	26,000
   Operating Income	10,500	8,000	7,000
   Sales and Administrative Expenses	6,000	4,000	3,000
   Interest Expense	2,500	2,000	1,000
   Net Income	2,000	2,000	3,000

Above is a comparative income statement for Cecil, Inc. for the years 2010, 2011, and 2012. Calculate the profit margin for each of these years. Comment on the profit margin trend.

Guided Response:
Let at least two of your peers posts know what you changes you would recommend to improve the net margin of the company.