Your company is considering buying back some of its stock. You are assigned the task of correctly assessing the value of the company so that the company can make a rational decision.
Select 4 ratios listed below that you believe would provide the best insight into the condition of the company and provide a rationale as to why you feel that they would be most relevant.
Current Ratio = Current assets/current liabilities
Acid-test Ratio = Cash+accounts recieveable/current liabilities
Return on equity = Net Income/total common equity
Return on Assets = Net income/total assets
Profit Margin = net income after taxes/sales
Operating return on assets = operating profits/total assets
Accounts Receivable Turnover = annual credit sales/accounts recievable
Days in Inventory = inventory/daily cost of goods sold
Inventory Turnover = cost of goods sold/inventory
Total Asset Turnover = sales/total assets
Fixed Asset Turnover = sales/net fixed assets
Debt-to-Ratio = total debt/total assets
Debt-to-Asset = liability(debt)/assets
Debt-to-Equity = total liabilities(debt)/shareholders equity