Interpreting Financial Ratios
Luna Lighting, a retail firm, has experienced modest sales growth over the past three years
but has had difficulty translating the expansion of sales into improved profitability. Using
three years' financial statements, you have developed the following ratio calculations and
industry comparisons. Based on this information, suggest possible reasons for Luna's profitability problems.
2009 2008 2007 2009
Average collection period 45 days 46 days 47 days 50 days
Fixed asset turnover
Total asset turnover
Debt ratio 50%50% 50% 54%
Times interest earned ...
Excerpt from file: InterpretingFinancialRatios LunaLighting,aretailfirm,hasexperiencedmodestsalesgrowthoverthepastthreeyears buthashaddifficultytranslatingtheexpansionofsalesintoimprovedprofitability.Using threeyearsfinancialstatements,youhavedevelopedthefollowingratiocalculationsand
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