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" Ratio comparisons Robert Arias recently inherited a stock portfolio from his uncle. Wishing to learn more about the companies in which he is now invested, Robert performs a ratio analysis on each one and decides to compare them to one another. Some of his ratios are listed below.
|Ratio||Island Electric Utility||Burger Heaven||Fink Software||Roland Motors|
|Net profit margin||6.2%||14.3%||28.5%||8.4%|
Assuming that his uncle was a wise investor who assembled the portfolio with care, Robert finds the wide differences in these ratios confusing. Help him out.
b. Why might the current and quick ratios for the electric utility and the fast-food stock be so much lower than the same ratios for the other companies?"
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