Finance Anaylsis

If a firm is expected to have a profit margin of 8 percent but trades at a price to sales ratio of 25, what inferences would you make?

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  1. It depends upon the terms of the cerdit agreement but if you say you have 14 months left with no interest being charged I would put the money in a term deposit that matures 1 month before the payment of the cerdit bill is due. This will keep you from spending the money on something else.The interest on the term deposit will be taxable at whatever your tax rate is but the net effect is you will come out a couple of bucks ahead.If you are the type that would probably spend the money on some other item rather than to save it I would put it on the Best Buy charge account.Remember when it starts to bill you the interest and you have not paid it off it will be at about 28%!!!!!!!!!!!!!!!

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