You have been asked to present to a group of investors, and you can only present two financial ratios to help persuade them to invest. The ratios of choice is Profit Margin and Return on equity. • Explain the ratios you chose. Why did you choose those ratios, and how will it help you convince the investors to invest? • There are limitations to ratio analysis. What is missing from the ratios you chose?
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- How would you use financial statement analysis? Is there one ratio that you feel is more valuable than another?Comment on the following statements with suitable example: i. The ratio return on assets has net income in the numerator and total assets in the denominator. Explain how each part of the ratio could cause return on assets to fall. ii. Explain how return on assets could decline, given an increase in net profit margin. iii. If quoted market prices are not available, a personal financial statement cannot be prepared. Comment.A general question about ratios: do you think that a ratio can be too high or too low? Why or why not? To help you focus start with the debt to equity and then the current ratio Think a little deeper - What does the Current ratio (or amount of Working Capital tell us)? Hint - what do we expect to happen to current assets and current liabilities?
- In isolation, which of the following is TRUE about a financial ratio? Select one: a. Useful only for past performance b. Useful piece of information c. Useful only for future predictions d. Useless piece of informationFor a project I have due, I need help determining which of these ratios is best to determine financial performance. When doing my research, I am having trouble undertanding the difference between the 'Financial Leverage' ratio and Debt equity ratio. Can you explain the difference to me and tell me what these meanAnswer the following question in essay. What do you understand by current ratio? What are it uses? What are its limitations? Ratio analysis is widely used as a tool of financial analysis, yet it suffers from various limitations. Explain. How can solvency of a firm be measured? What you understand by Liquidity ratios? Discuss their significance. Page 1 Module PSFM08 MANAGERIAL ACOUNTING WITH FINANCIAL ANALYSIS AND REPORTING Explain the importance of profitability ratio. How they are worked out?
- Could you please discuss the limitations of financial ratio analysisWhich of the following decision criteria is the easiest to use and very popular among investors? O Payback period. O Internal rate of return. O Average accounting return. Net present value. O Discounted return on investment.I need help with the part Profitabilitiy Ratios. The Liquidity Ratios, Asset Management Ratios, and Financial Leverage Ratios are already answered. Just need help with the last part which is Profitbaility Ratios.
- Why is the acid test ratio a more rigorous test of short-term solvency than the current ratio? A. The quick ratio eliminates prepaid expenses for the denominator.B. The quick ratio eliminates prepaid expenses for the numerator.C. The quick ratio eliminates inventories from the numerator.D. The quick ratio considers only cash and marketable investments as current assets.E. The quick ratio eliminates revenue from the numerator.The return on equity will be <List A> and the debt ratio will be <List B> under Arrangement #2, as compared with Arrangement #1. Your answer must be supported with a solutionWhat is the difference between the ratios that use the market price and the other ratios? Why might you get a different picture about firm performance from the different ratio types? Describe a specific scenario where this might occur.