Discussion
The steel company has a low asset turnover while the jewelry has a high asset turnover. The asset turnover is the amount of the sales revenue of the product that is generated per the unit of the asset in relation of the dollar. The ratio shows how efficiency is the company in the asset deploying. The formula gives this; asset turnover = company's revenue/ company's total asset. This leads to the conclusion of the higher the ratio, it indicates the company is in a position to generate more revenue as per dollar of the asset. The steel company has the more assets than the rate at which they are selling, therefore, making the ratio to below, therefore, the low asset turnover. The jewelry retailer has fewer assets and making more sales. This makes the high revenue hence the high asset turnover.Sales margin
The software company is expected to have high sales margin and the supermarket having the low sale margin in the category. Considering the total cost of the sale in the software business it is much lower than the pharmaceutical, jewelry retailer and the supermarket. On the other hand, the supermarket in the category has the highest cost of the sale, therefore, reducing the sales margin.Cash flow
The cash flow shows the level of the firm in the performance and investment. A statement that the company operating cash flow where it is less than the earning is a poor performer and has a poor investment prospect it is not true. The excess earning from the expenses is the profit or the gain of the company. This shows the firm is operating at a profit. It does not necessarily that the firm has poor investment prospective. The poor performing companies are those having that earning are lower than the flow of the cash. This shows that the firm has no expansion capacity, the revenue it has only caters for the day to day activities.The faster growth of the business than the sustainable growth rate
The business can grow faster than is sustainable growth rate and this is true. This is at the situation of the market where the company has a competitive advantage over the others. This form of the growth is seasonal but not permanent. The most likely firms that experience faster growth offers the secondary the goods and especially on the luxury goods. This is having a strategic business location with less competition hence enjoying the market. This is very rare cases in the marker due to competition.
Operating cash than the working capital operation
There are several reasons of the firm operating with low cash than the working capital operations. The interpretation of this can be traced from the company or business that is experiencing the structural growth. This is making the business apply more of the income on the development and the daily operation of the business. The most important of this is to reflect on the development and the growth of the institution.
Finally, the working capital can be low in the situation of the low income as it may be in the trough, in the business cycle. This makes the company to concentrate more on the up keeping than the development. This is the key to the business sustainability and ensuring the operation is in progress.
