Suppose you are conducting an analysis of the financial performance of Green Caterpillar Garden Supplies Inc. over the past three years. The company did not issue new shares during these three years and has faced some operational difficulties. The company has thus pilot tested some new forecasting strategies for better operations management. You have collected the company's relevant financial data, made reasonable assumptions based on the information available, and calculated the following ratios. Ratios Calculated Year 1 Year 2 Year 3 Price-to-cash-flow 6.20 8.06 9.03 Inventory turnover 12.40 Debt-to-equity 14.88 16.67 0.30 0.32 0.38 Based on the preceding information, your calculations, and your assumptions, which of the following statements can be included in your analysis report? Check all that apply. A plausible reason why Green Caterpillar Garden Supplies Inc.'s price-to-cash-flow ratio has increased is that investors expect higher cash flow per share in the future. The company's creditworthiness has improved over these three years as evidenced by the increase in its debt-to-equity ratio over time. The market value of Green Caterpillar Garden Supplies Inc.'s common shares declined over the three years. Green Caterpillar Garden Supplies Inc.'s ability to meet its debt obligations has worsened since its debt-to-equity ratio increased from 0.30 to 0.38.
Suppose you are conducting an analysis of the financial performance of Green Caterpillar Garden Supplies Inc. over the past three years. The company did not issue new shares during these three years and has faced some operational difficulties. The company has thus pilot tested some new forecasting strategies for better operations management. You have collected the company's relevant financial data, made reasonable assumptions based on the information available, and calculated the following ratios. Ratios Calculated Year 1 Year 2 Year 3 Price-to-cash-flow 6.20 8.06 9.03 Inventory turnover 12.40 Debt-to-equity 14.88 16.67 0.30 0.32 0.38 Based on the preceding information, your calculations, and your assumptions, which of the following statements can be included in your analysis report? Check all that apply. A plausible reason why Green Caterpillar Garden Supplies Inc.'s price-to-cash-flow ratio has increased is that investors expect higher cash flow per share in the future. The company's creditworthiness has improved over these three years as evidenced by the increase in its debt-to-equity ratio over time. The market value of Green Caterpillar Garden Supplies Inc.'s common shares declined over the three years. Green Caterpillar Garden Supplies Inc.'s ability to meet its debt obligations has worsened since its debt-to-equity ratio increased from 0.30 to 0.38.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 63P: Mike Sanders is considering the purchase of Kepler Company, a firm specializing in the manufacture...
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Transcribed Image Text:Suppose you are conducting an analysis of the financial performance of Green Caterpillar Garden Supplies Inc. over the past three years.
The company did not issue new shares during these three years and has faced some operational difficulties. The company has thus pilot tested some
new forecasting strategies for better operations management. You have collected the company's relevant financial data, made reasonable assumptions
based on the information available, and calculated the following ratios.
Ratios Calculated
Year 1 Year 2 Year 3
Price-to-cash-flow
6.20
8.06
9.03
Inventory turnover 12.40
Debt-to-equity
14.88
16.67
0.30
0.32
0.38
Based on the preceding information, your calculations, and your assumptions, which of the following statements can be included in your analysis
report? Check all that apply.
A plausible reason why Green Caterpillar Garden Supplies Inc.'s price-to-cash-flow ratio has increased is that investors expect higher cash
flow per share in the future.
The company's creditworthiness has improved over these three years as evidenced by the increase in its debt-to-equity ratio over time.
The market value of Green Caterpillar Garden Supplies Inc.'s common shares declined over the three years.
Green Caterpillar Garden Supplies Inc.'s ability to meet its debt obligations has worsened since its debt-to-equity ratio increased from
0.30 to 0.38.
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