When calculating ratio analysis of a company in china, does it make sense to use the industry ratios of US to compare?

Expert Solution

It doesn't make sense as the market is totally different. Companies across geographies act differently as the consuming pattern of customers is different across the globe. A particular item may be in high demand in a particular country, whereas it may lack the desired demand in other countries due to different consumption patterns. Developed countries usually have a demand for luxury goods, whereas developing countries may have a demand for essential commodities.

jeff jeffy answered 2 years ago

What does analyzing companies against their industry using ratio analysis tell us? What ratios would you...

What does analyzing companies against their industry using ratio analysis tell us? What ratios would you use to do the analysis and why?

Ratio Analysis - Use the 2019 numbers This assignment includes calculating the 10 ratios for two...

Ratio Analysis - Use the 2019 numbers This assignment includes calculating the 10 ratios for two different companies (Lockheed and Boeing) in the industry which can be found attached to this assignment. Then, tell me which company you would invest in and why. Ratios (10 x 10 x 2 = 200) + 40 (explanation) = 240 points The 10 ratios to be calculated are the Current Ratio, Quick Ratio, Debt Ratio, Debt to Net Worth Ratio, Net Sales to Total Assets...

When does it make the most sense for a company to use an aggressive working capital...

When does it make the most sense for a company to use an aggressive working capital strategy?

Compare all the company ratios with all the industry ratios. What does the ratios indicate Ratios...

Compare all the company ratios with all the industry ratios. What does the ratios indicate Ratios Company/industry 2016 2017 2018 Interest coverage ratio Company 3.77 3.49 2.91 Industry 17.07 249.55 267.77 Debt/EBITDA Company 4.58 6.11 5.06 Industry 3.86 4.45 3.92 Quick Ratio Company 0.93 1.20 1.17 Industry 1.39 1.40 1.43 Total Debt Ratio Company 1.02 0.97 0.96 Industry 0.62 0.65 0.66 Long Term Debt Ratio Company 0.47 0.53 0.51 Industry 0.26 0.27 0.26 Cash Flow from Operations Company 0.83 0.76...

Ratio Analysis: Compare the two companies based on their ratios. Use the last column and describe how each company is doing in relation to the ratios

RATIOSCommunications/ElectronicsAT&TSprintANALYSISProfitability Ratios (%)Gross Margin59.0254.2358.08EBITDA Margin---Operating Margin16.2313.84-2.89Pre-Tax Margin13.799.59-10.1Effective Tax Rate1818.91-1.8Financial StrengthQuick Ratio10.520.26Current Ratio1.020.810.67LT Debt to Equity145.4687.2196.43Total Debt to Equity160.4496.06196.43Interest Coverage---Valuation RatiosPrice/Earnings Ratio65.9511.21203.67Price to Sales P/S1.911.181.09Price to Book P/B3.41.141.38Free Cash Flow per Share59.3318.63-Management Effectiveness (%)Return On Assets5.040.94-3.11Return On Investment6.496.97-3.59Return On Equity8.213.039.92EfficiencyReceivable Turnover13.888.448.86Inventory Turnover27.28-13.37Total Asset Turnover0.490.320.37Free Cash Flow/Net Income13.88-8.861- Ratio Analysis: Compare the two companies based on their ratios. Use the last column and describe how each company is doing in relation to the ratios. Explain the significance of how the company ratios...

Does the DR Congo-China venture make economic integration sense? Explain.

Does it make sense to have an auto industry in Australia? Why did the industry fail?

Describe the three categories of ratios used in ratio analysis. When working on assessing the company...

Describe the three categories of ratios used in ratio analysis. When working on assessing the company you chose, which of these ratios do you think is the most important indicator of successful performance, why

Facebook industry average financial ratios FACEBOOK, INC. RATIO ANALYSIS Industry Average Profitability Ratios Operating Margin Net...

Facebook industry average financial ratios FACEBOOK, INC. RATIO ANALYSIS Industry Average Profitability Ratios Operating Margin Net Profit Margin Return on Equity Financial Strength Ratios Current Ratio Debt-Equity Ratio

Analyzing ratios One of the most important applications of ratio analysis is to compare a company’s...

Analyzing ratios One of the most important applications of ratio analysis is to compare a company’s performance with that of other players in the industry or to compare its own performance over a period of time. Such analyses are referred to as comparative analysis and trend analysis, respectively. Common size analysis requires the representation of financial statements in relation to a single financial statement item or base. What is the most commonly used base item for a common size balance...

Question