Exam 13: How Do Managers Use Financial and Nonfinancial Performance Measures

The following debt to equity ratio is for two companies in the same industry. Company A Campany B Debt to equity ratio 4.5 to 1 13.6 to 1 Which of the following statements is always true?

Exhibit 13-1 Xavier Company reported the following income statement and balance sheet amounts on December 31,2017. Net sales revenue (all credit) \ 1,700,000 Cost of goods sold 1,040,000 Gross margin 660,000 Selling and general expenses 420,000 Interest expense \ 0,000 Net income \ 180,000 Current assets \ 100,000 \ 90,000 Long-term assets 830,000 800,000 Total assets \ 930,000 \ 890,00 Current liabilities \ 56,00 Long-term liabilities 204,000 390,00 Common stockholders' equity 654,000 444,00 Total liabilities and stockholders' equity \ 930,000 \ 890,00 Inventory and prepaid expenses account for $50,000 of the 2017 current assets. Average inventory for 2017 is $36,000. Average net accounts receivable for 2017 is $62,000. Average one-day sales are $5,900. There are 12,000 shares of common stock outstanding at the end of 2017. The market price per share of common stock is $27 at the end of 2017. The EPS for 2017 is equal to $1.50 per share. -Refer to Exhibit 13-1.What is the debt to assets ratio for 2017 (rounded to two decimal places)?

In general,managers prefer the profit margin ratio to decrease over time.