Ausford DQ Week 5 ACC205: Principles of Accounting I

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  1. Ratios 

    Ratios 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.



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