132. ROI: What and why?In general terms, what do all "ROI" ratios measure? Why are such computations useful? 133. Income statement classificationsSimon Hardware and Garfunkel Foods are sole...

132. ROI: What and why?
In general terms, what do all "ROI" ratios measure? Why are such computations useful?

133. Income statement classifications
Simon Hardware and Garfunkel Foods are sole proprietorships with similar amounts of total assets. Also, both businesses earn similar amounts of revenue, incur similar amounts of operating expenses, and report similar net incomes. However, Simon has a higher cost of goods sold, while Garfunkel Foods has higher interest expense.
Indicate which of these companies has the higher (a) gross profit rate, and (b) return on assets. In each case, explain the reasons for each answer.

134. Improving the current ratio

Carter Corporation financed construction of a new addition to its facilities with a large long-term note payable. As a condition of obtaining the loan, Carter agreed to maintain a current ratio at year-end of at least 1.7 to 1. If Carter fails to maintain this ratio, the lender may demand immediate repayment of the principal amount of the note and all unpaid accrued interest. As the end of the year approaches, Carter is concerned about the magnitude of its current ratio. Suggest some actions that the company might take to increase the magnitude of the current ratio.