ACCT205 Week 5 Discussions and Responses 1.docx

# A company can keep up with the amount of working

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current ratios are two of the ratios that lets them know of possibilities for liquidity issues. A company can keep up with the amount of working capital by dividing current assets by current liabilities. The investors look at the different categories created such as liquidity measures debt service, turnover, and profitability. “The ratios are divisible into categories related to liquidity measures, debt service, turnover, and profitability.” Wainwright, (2012). For example, current ratios show investors the short-term liquidity of the company. Wainwright, S. K. (Ed.). (2012). Principles of Accounting: Volume I [Electronic version]. Retrieved from

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Discussion 1 Response 1 Student Wrote My Response Discussion 1 Response 2 Student Wrote My Response Discussion 2 Above is a comparative income statement for Cecil, Inc. for the years 2010, 2011, and 2012. Calculate the net-profit margin for each of these years. Comment on the profit margin trend. My Response Calculate the net-profit margin for each of these years. I calculated the net-profit margin by taking the net income and divided it by revenue times 100 to get the net-profit margin for each year. As Wainwright stated, “the goal is to compute how effectively assets and equity are being used to generate profits.” (2012). Year Ending 2010 – 9% = \$3,000 Net Income/\$33,000 Revenue x 100 Year Ending 2011 – 6% = \$2,000 Net Income/\$35,000 Revenue x 100 Year Ending 2012 = 5% = \$2,000 Net Income/\$35,000 Revenue x 100 Comment on the profit margin trend. Cecil, Inc. Years 2010, 2011 and 2012 all had a decrease in percentages of the net-profit margin. The company profits for these years had a decrease. Although, revenue did have increases every year, the net profits decreased for those same years. The decreases in net income are caused by increases in cost, such as
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• Fall '10
• RobertCarr
• Accounting, Revenue, Net Income, Generally Accepted Accounting Principles, Wainwright

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