WK 2 DQ 1 - 3.46 Debt to Assets 30,597,000/22,348,000 = 1.37

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Please post a response between 200 - 300 words to the following discussion question by clicking on Reply. Using the financial statements link you posted in your Week 1 Discussion Question answer, compute at least three ratios from both the Income Statement and the Balance Sheet. State why you chose those particular ratios and what each tells you about the financial status of the company? If prior year numbers are available, determine if one or two of your ratios increased or decreased. What additional information does that provide about the company?? Income statement ratios 2010 2009 Net profit margin 10,217,000/106,565,000 = .0958 11,601,000/107,808,000 = 1.08 Gross profit margin 106,565,000-44,149,000/106,565,000 = 5.85 107,808,000- 44,579,000/107,808,000 = 5.86 Earnings per share 10,217,000/2,830,000 = 3.61 11,601,000/2,841,000 = 4.08 Balance Sheet ratios Debt to Equity 30,597,000/86,912,000 = 3.52 29,136,000/84,143,000 =
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Unformatted text preview: 3.46 Debt to Assets 30,597,000/22,348,000 = 1.37 29,136,000/21,745,000 = 1.33 Current 22,348,000/30,597,000 = .73 21,745,000/29,136,000 = .74 I believe all of the ratios are important. I chose these ratios because I believe profitability and debt ratios give us the best insight into a companys financial health. Profitability ratios show how much the company has earned and the profits made on sales. The higher the percentage the more profit. As we can see from my calculations Verizons profitability ratios dropped slightly. This means there was a slight drop in from 2009 to 2010. We can also see from the debt ratios that the debt to equity and debt to assets has increased slightly. This tells us that Verizons capacity to engage in additional borrowing has dropped. The current ratio tells us that Verizons capability to cover short-term debt has lowered from 2009 to 2010....
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This note was uploaded on 02/16/2012 for the course ACCOUNTING ACC561 taught by Professor Jardine during the Spring '12 term at University of Phoenix.

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