Unformatted text preview: debt coverage and the times-interest-earned ratio. Profitability assesses how well a company is able to generate earnings compared to its expenses during the period. Some examples of profitability ratios are profit margin, return on assets and return on stockholders equity. The blue company had the best profitability, solvency and liquidity. The reason for this was because it had higher turnover ratios, lowest days in inventory, lowest collection period, and more free cash flow. Although the Blue Company had a lower profit margin the ability of the company to turnover inventory and collect payments was much greater....
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- Spring '07
- Accounting, Financial Ratio, Blue Company