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Bu121 March 07 2013.docx

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Wilfrid Laurier University
Laura Allan

Bu121 March 03 2013 Discuss with your group to see if you’re interested in the BDO consulting that starts on Monday but registration starts today Critical thinking assignment – do not write it like an essay, YOU SHOULD WRITE AS AN PERSUASIVE ARTICLE/argument  Do research to formulate opinion as a claim  Use concept mapping on the internet as a guide  She wants to see the structure of the argument (do it first) Interpreting Leverage Ratio Trends -calculating in liquidity related to cash burn and cash build -if they don’t have enough cash do they get it from borrowing or selling their equity -Degree of debt has gone up (first three ratio) -do we have earnings to cover cost has gone down (last two ratios) -earnings are not increasing at same rate as debt increase -impact on leverage risk = implication where leverage has been more risky -taken greater percentage of current debt *is their risk that their taking that is worthwhile or not Profitability and Efficiency - We generate expenses in order to gain profit - Profitability = starting point on cash flow - Entrepreneur care about value since profit = cash = value Gross Profit Margin = (net sales – cost of goods sold) / net sales 33.91% - means that 66 percent of the sale goes to the cost Operating Profit Margin= EBIT / net sales 8.17% -lower operating profit margin = lower operating expenses -check if there is a particular expense that has lost control therefore you could find solutions to fix it Net Profit Margin= net income / net sales 3.3% -if it is weak then we cannot isolate issue -tells us the expense we would need to focus on NOPAT Margin
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