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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Looking for a fast way to evaluate a company...some are 3 time

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Looking for a fast way to evaluate a company...some are 3 time gross profit, or 1 times sales. What is the best way for a company that sells equipment. What is a good debt to equity ration. thanks
Thank you for your question, and thanks for using JustAnswer.com. A good way to evaluate a company that sells equipment is to look at their gross profit. This tells you how much is left over after the company purchases the goods that they sell. Because this is an equipment sales company, their revenues will be extremely high, but they also have extremely high costs to go with that.

A good debt to equity ratio would be .5. You don't want the company to have too much debt, because it will be hard to meet the debt obligations.

Please let me know if you need anything additional. If not, please rate my response "excellent" so that I may receive credit for assisting you today. Thanks again!
Customer: replied 3 years ago.

Would you use 1 times GP?


 

Yes, I would use 1 times gross profit when evaluating a firm.

Please let me know if I can be of further assistance. If not, please rate my response as "excellent" so that I may receive credit for assisting you today
Customer: replied 3 years ago.

The Gering ratio is .07 you said .5, so this is really good right?

If the debt to equity ratio is .07 that would be a very good result.

Please let me know if you need anything additional. If not, please rate as "excellent" so that I may receive credit for assisting you today
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