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Baldwin Company Ratio Analysis

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Selling expense to sales 10.1% 14.0% 15.6%
Sales to plant assets ratio 3.8 to 1 3.6 to 1 3.3 to 1
Current ratio 2.9 to 1 2.7 to 1 2.4 to 1
Acid-test ratio 1.1 to 1 1.4 to 1 1.5 to 1
Inventory turnover 7.8 times 9.0 times 10.2 times
Accounts Receivable turnover 7.0 times 7.7 times 8.5 times
Total assets turnover 2.9 times 2.9 times 3.3 times
Return on total assets 10.4% 11.0% 13.2%
Return on stockholder's equity 10.7% 11.5% 14.1%
Profit margin ratio 3.6% 3.8% 4.0%

After the meeting, the company's CEO holds a press conference with analysts in which she mentions the following ratios:

2011 2010 2009
Sales trend percent 147.0% 135.0% 100.0%
Selling expense to sales 10.1% 14.0% 15.6%
Sales to plant assets ratio 3.8 to 1 3.6 to 1 3.3 to 1
Current ratio 2.9 to 1 2.7 to 1 2.4 to 1

1. Why do you think the CEO decided to report 4 ratios instead of the 11 prepared?

2. Comment on the possible consequences of the CEO's reporting of the ratios selected.

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1. Why do you think the CEO decided to report 4 ratios instead of the 11 prepared?

Ratios help us in understanding the performance of the organization. It is the relationship between two or more financial figures. The CEO decided to report 4 ratios instead of the 11 prepared as the other 7 ratios show inefficient performance. Inventory turnover has declined, indicating deteriorating ...

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