The calculations above help assists managers, employees, investors, lenders, and suppliers determine the financial health of a company. Starting with return on sales, return on sales helps measures the company’s ability to earn profits. The return on sales is calculated, by dividing their net income after taxes by net sales. The average return on sales for companies is between four and five percent, the higher the percentage the better. Target return of sales for their last annual period was 3.9%, which mean that were around the average for most companies. Next, was determining Target’s current ratio, the current ratio is calculated by dividing a company’s current assets by their current liabilities. The current ratio indicates if a company …show more content…
In addition, it helps illustrate if a company has made successful past decisions, and can finance for growth. This information is important for managers and employees because it can help them perform their job more efficiently by making better decision makers throughout the day. For example, if they are aware of how often their company turnovers its inventory, they can adjust how often to place an order, and how much to order. Also, the information, can help give managers and employees a general idea where the companies financial situation stands. The calculations and information have importance for investors, lenders and suppliers so they can know if the company can pay its dividends, or repay its debts. The information helps determine the financial health for both lenders and investors it help indicated with the company is profitable and has a return on its sales. The information provides answers on where their money went, and where their money is now. They can also, evaluate their current and future cash flow, so they determine if the company has enough cash to pay for their expenses and asset