ACG2071 Miami Dade College Ratio Analysis and Reporting Paper
Question Description
As Beacon Company controller, you are responsible for informing the board of directors about its financial activities. At the board meeting, you present the following information.
2017
2016
2015
Sales trend percent
147.0%
135.0%
100.0%
Selling expenses to sales
10.1%
14.0%
15.6%
Sales to plant assets ratio
3.8 to 1
3.6 to 1
3.3 to 1
Current ratio
2.9 to 1
2.7 to 1
2.4 to 1
Acid-test ratio
1.1 to 1
1.4 to 1
1.5 to 1
Inventory turnover
7.8 times
9.0 times
10.2 times
Accounts receivable turnover
7.0 times
7.7 times
8.5 times
Total asset turnover
2.9 times
2.9 times
3.3 times
Return on total assets
10.4%
11.0%
13.2%
Return on stockholders’ equity
10.7%
11.5%
14.1%
Profit margin ratio
3.6%
3.8%
4.0%
After the meeting, the company’s CEO holds a press conference with analysts in which she mentions the following ratios.
2017
2016
2015
Sales trend percent
147.0%
135.0%
100.0%
Selling expenses to sales
10.1%
14.0%
15.6%
Sales to plant assets ratio
3.8 to 1
3.6 to 1
3.3 to 1
Current ratio
2.9 to 1
2.7 to 1
2.4 to 1
Required
Why do you think the CEO decided to report 4 ratios instead of the 11 prepared?
Comment on the possible consequences of the CEO’s reporting of the ratios selected.

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