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16 July, 06:49

New Century Products is a company that was founded last year. While the outlook for the company is positive, it currently has negative earnings. If you wanted to measure the progress of this firm, which one of the following ratios would probably be best to monitor given the firm's current situation? A. Price-sales ratioB. Market-to-book ratioC. Profit marginD. ROE

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  1. 16 July, 08:45
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    A. Price-sales ratio

    Explanation:

    The formulas to compute these ratios are shown below:

    1. Price sales ratio = (Market price per share) : (Total sales per share)

    where,

    Total sales per share = (total sales) : (Number of shares)

    2. Market to book ratio = (Market price per share) : (book value per share)

    3. Profit margin = (Profit earned : Sales revenue) * 100

    It can be gross profit or net profit

    4. Return on Equity = Net income : Shareholder equity

    According to the given scenario, the progress of the firm would be measured by the price-sales ratio as it defines the price for each dollar of sales revenue
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