Question 1) Over the past year, M.D. Ryngaert & Co. has realized an increase in its current ratio and a drop in its total assets turnover ratio. However, the company's sales, quick ratio, and fixed assets turnover ratio have remained constant. What explain these changes?
Question 2) Profit margins and turnover ratios vary from one industry to another. What differences would you expect to find between a grocery chain such a Safeway and a steel company? Think particularly about the turnover ratios, the profit margin, and the Du Pont equation.
Question 3) How might (a) seasonal factor and (b) different growth rates distort a comparative ratio analysis? Give some examples. How might these problems be alleviated?
Question 4) Why is it sometimes misleading to compare a company's financial ratios with those of other firms that operate in the same industry?