Section_2_Point_of_Interest_Analysis_Notes

Section_2_Point_of_Interest_Analysis_Notes - AEM 323...

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AEM 323 Managerial Accounting January 31, 2008 PacSun vs. AEOS Point of Interest Analysis – AEOS – Very high financial leverage percentage in comparison to the market average. Utilized company debt as a tool to increase resources that generate more profit. Lower than market average fixed asset turnover. Less effective at utilizing fixed assets to generate more revenues for shareholders. Can increase by increasing sales volume or decreasing less productive assets. Return on Equity was much higher than the industry average. The firm had a very effective overall business strategy. The firm earned a profit for every dollar of the stockholder’s investment. Outstanding profit margin. High percentage of sales dollars are converted to profit. Increased by increasing sales volume, sales price, or decreasing expenses. Higher than average inventory turnover ratio. Inventory moves quickly through production process to the ultimate consumer. Somewhat high current ratio. Suggests inefficient use of resources.
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