U2DB2 Response 1 and 2

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U2DB2 Response 1 and 2
Response 1
The student primarily relied upon financial ratios to evaluate the financial performance of Global-Tech Industries, Inc. However, it is crucial to note that there are other ways of assessing the financial position of a firm. In this regard, factors such as the physical location of the company premises, labor costs, and transportation costs could affect the business. Perhaps an examination of these factors will avail answers to the student’s concerns about Global-Tech Industries high cost of goods sold. It is also vital to bear in mind that ratios change from industry to industry, which means interpreting them requires in-depth comprehension of the industry under focus (Michael & Albert, 2015). Having said this, I was impressed by the student’s solid understanding of financial ratios and how they can be interpreted. Also, just like the student, it was also my first time to learn the phrase “stockholder’s deficit.’ Overall, I am satisfied with the response, and, therefore, I do not have any questions about the posting.
Response 2
The student analyzed Chipotle restaurant by utilizing only two ratios, the current ratio, and gross profit margin. Whereas these two ratios are important tools for assessing the company, I feel that the student should have explored more ratios. In this respect, the other ratios which will go a long way in giving a better understanding of Chipotle’s performance include debt to equity ratio, inventory turnover, return on equity ratio, and even return on assets ratio.

By using many ratios, it will be easy to make comparisons between Chipotle and the two companies in the group project. It will also allow for comparison between various aspects of the company itself, something difficult to achieve when using two ratios only (Bull, 2007). One key thing that I learned from this posting is how to interpret gross profit margin. However, the student did not clearly indicate how the company he selected is different from the companies in the group project as per the initial instructions. Perhaps a clarification will be necessary.
References
Bull, R. (2007). Financial ratios: how to use financial ratios to maximize value and success for your business. Retrieved from HYPERLINK “https://ebookcentral-proquest-com.ezproxy.liberty.edu” https://ebookcentral-proquest-com.ezproxy.liberty.edu
Michael, R., & Albert, J. P. (2015). Financial Ratios for Executives [recurso electrónico]: How to Assess Company Strength, Fix Problems, and Make Better Decisions. (Springer eBooks 2015 [recurso electrónico].) Berkeley, CA.