C. Usually, the most valuable companies are "current" with their investment in capital expenditures. They have consistently invested in the most efficient and productive technology.
D. Often, the most valuable companies have lower assets-to-sales ratios. For example, a company with assets of $5 million supporting sales of $15 million will be more valuable than a company with assets of $7.5 million supporting the same sales of $15 million. Obviously, the ratio of 1:3 implies more efficient utilization of the assets, as well as more frequent turns of the current assets. On the other hand, the company that has deferred cap expenditure investments and is temporarily benefiting by getting by with old equipment will also have a good, but misleading, assets-to-sales ratio.
- People:
- Andrew Paparozzi