Comparing Profitability: Companies: NFX, KMG and Burlington Using ROA, ROE and other ratios to compare profitability of these three companies.

Comparing Profit mightiness: Companies: NFX, KMG and Burlington 1) The rate of return on addition (ROA) calculates a firms effective autonomous use of an asset to generate dinero without regards to the assets financing. Banks and another(prenominal) creditors use this ratio to quantify a firms luck of going bankrupt. The ROA can be scurvy down to test Profit Margin and Asset turnover rate Ratio, this will uphold you discover potential strengths and weakness of distinct entities. When you compare the tercet companies NFX perceives to have the highest ROA ratio, even though Burlington has the highest gain margin, but NFX ability to rapidly transform inventory to sales explains why NFX has the highest ROA for the start terzetto years. From 1998 to 2000 NFX, KMG and BR had all experient constantly increase hard roes, but in 2001 their ROE dropped an sightly of 38%. In 2001, BR posted the superlative ROE of around 12.34%. KMGs forceful decline in ROE to 17% could have b een cod to the chemical industries volatility and, therefore, had a deal effect on KMGs total earnings. Another contributing agentive role to the decline in the companies ROE, may have been their 10% bonnie decrease in asset turnover over the previous(prenominal) times two years. after taking everything into account over the past five years, BR has still provided the best ROE compared to the other two firms. 2)When analyzing the solvency ratios of the three companies we compare debt to equity, debt to assets, and interest coverage ratios.

surrounded by years 1998 to 2002, KMG has achieved the greatest amoun t of solvency risk. KMGs has an total debt-! to-equity percentage of 138% since 1998 compared to BRs and NFXs average of only about 90.32% and 50.81%. KMG has doubled the amount of debt to equity compared to the two other companies. On top of... Author shows in insight understanding of the three companies and industry. However, the affinity is rather brief to deck the understanding from the ratios. If you want to enchant a full essay, lay it on our website: BestEssayCheap.com

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