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Do sales prices exceed unit costs, and are sales high enough as reflected in PM, ROE, and ROA
average number of days from sale until cash received. higher than industry means firm collects too slowly.
Computron has higher proportion of inventory and current assets than Industry
Computron now has more equity (which means LESS debt) than Industry.
Computron has more short-term debt than industry, but less long-term debt than industry.
Computron has lower COGS (86.7) than industry (84.5), but higher other expenses.
Result is that Computron has similar EBIT (7.1) as industry.
We see that 2010 sales grew 105% from 2008, and that NI grew 188% from 2008.
So Computron has become more profitable.
We see that total assets grew at a rate of 139%, while sales grew at a rate of only 105%.
So asset utilization remains a problem.
Du Pont system
Expense control (PM)
Asset utilization (TATO)
Debt utilization (EM)
It shows how these factors combine to determine the ROE.
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