Ausford DQ Week 5 ACC205: Principles of Accounting I

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 2012Year Ending December 2011Year Ending December 2010Revenues40,00035,00033,000Operating Expenses   Salaries15,00010,0009,000Maintenance and Repairs6,0009,00010,000Rental Expense2,5002,5002,500Depreciation2,0002,0002,000Fuel4,0003,5002,500Total Operating Expenses29,50027,00026,000Operating Income10,5008,0007,000Sales and Administrative Expenses6,0004,0003,000Interest Expense2,5002,0001,000Net Income2,0002,0003,000

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.