Concerning the current ratio it should be stated that Skechers is in a better

Concerning the current ratio it should be stated that

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Concerning the current ratio, it should be stated that Skechers is in a better situation to respond to its financial obligations than the other two companies. However, we see that Adidas has the greatest working capital of all; this means that it has a lot of assets for its debts to be covered. Moving on to the acid-test ratio and putting it next to the current ratio, it is realized that although all acid-test ratios exceed 1, Skechers has the highest quick ratio, so its short-term assets can cover Skechers’s immediate liabilities better than Adidas and Puma. At this point, what should be stated is that in all companies, we see that the quick ratio is lower than the current ratio. This is an indication that current assets depend on inventory very much. However, this does not seem strange at all, due to the fact that we are talking about retail companies. As far as profitability is concerned, it is noticed that Adidas has the greatest gross profit margin, so it has the greatest source from which any possible additional expenses can be paid. However, things change when it comes to the net profit margin and the operating profit margin. In particular, Skechers has the greatest net profit and operating profit margin. This means that, in terms of the net profit margin, Skechers makes a greater profit when selling its products. What is more, the greatest operating profit margin indicates that this company has the lowest financial risk of all, so it may attract much more investors.
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  • Fall '15
  • Dr. Kotsias
  • Financial Accounting, Ratio, Profit margin, Generally Accepted Accounting Principles

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