Strang Steel - Essay Example

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Strang Steel

Gross Profit Margin: This ratio tells the profit of the firm in relation to sales, after the cost of producing the goods is deducted. Over the three years, the gross profit has been declining showing the inefficiency of Strang Steel's operations.Net Profit Margin: This ratio depicts the profit in relation to sales that a firm earns after taking account of all the expenses and taxes. It tells a firm's net income per dollar of sales. The net profit has also been declining over the three years showing that Strang Steel's sales profitability has declined. This could be attributed to the expenses rising steadily over the three years and eating out of the profits.Return on Equity: This ratio shows the return earned on the funds invested by the shareholders of the company. This ratio is also on the decline over the three years showing that the shareholders are getting less and less of their worth and the company is providing weak investment opportunities.Current Ratio: This ratio measures the firm's ability to meet short-term obligations. It shows the effectiveness of the utilization of current assets to meet short-term liabilities. Strang Steel's current ratio has declined steadily in the three years showing that the current assets are proving less and less useful in meeting the current liabilities and hence the inability of the company to pay its bills. ...Show more

Summary

Gross Profit Margin: This ratio tells the profit of the firm in relation to sales, after the cost of producing the goods is deducted. Over the three years, the gross profit has been declining showing the inefficiency of Strang Steel's operations…
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