PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 28, Problem 23PS
Summary Introduction
To discuss: Whether the financial ratios is useful and person X considers other accounting measures of risk.
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Which of the following is the correct explanation for the purpose of financial risk ratios?
Select one:
a. They show the probability of whether the company will face problems in operations.
b. They show the profitability of the company over a specific period of time.
c. They show the relative proportion of debt items with respect to shareholders' equity or total capital.
d. They show the relative levels of liquid assets of the company.
According to the information given in the table below, which of the following is Raw materials consumed?
Opening Stock Raw Materials 32300
Purchases 128800
Freight in 4950
Sales return 2350
Wages paid to labor 78900
Closing Stock Raw Materials 28400
Select one:
a. 135300
b. 149900
c. 143700
d. 137650
d. Current ratio
Which of the following is the correct explanation for the purpose of financial risk ratios?
Select one:
O a. They show the relative proportion of debt items with respect to shareholders' equity or total capital.
b. They show the profitability of the company over a specific period of time.
c. They show the probability of whether the company will face problems in operations.
O d. They show the relative levels of liquid assets of the company.
What are some of the critical trends to look for when analyzing financial statements?.
Chapter 28 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 28 - Prob. 1PSCh. 28 - Performance measures Keller Cosmetics maintains an...Ch. 28 - Performance measures Table 28.8 gives abbreviated...Ch. 28 - Performance measures Describe some alternative...Ch. 28 - Financial ratios Look again at Table 28.8, which...Ch. 28 - Prob. 6PSCh. 28 - Financial ratios True or false? a. A companys...Ch. 28 - Financial ratios Sara Togas sells all its output...Ch. 28 - Financial ratios As you can see, someone has...Ch. 28 - Prob. 10PS
Ch. 28 - Prob. 11PSCh. 28 - Prob. 12PSCh. 28 - Prob. 13PSCh. 28 - Prob. 14PSCh. 28 - Prob. 15PSCh. 28 - Prob. 16PSCh. 28 - Prob. 17PSCh. 28 - Prob. 18PSCh. 28 - Prob. 19PSCh. 28 - Prob. 20PSCh. 28 - Prob. 21PSCh. 28 - Prob. 22PSCh. 28 - Prob. 23PSCh. 28 - Prob. 25PSCh. 28 - Prob. 26PSCh. 28 - Prob. 27PS
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- Answer the following questions: a) How do you handle financial risk? b) How do you describe financial performance? c) How do you analyze financial performance? Full discussion.arrow_forwardWhich group of financial statement ratios best captures what investors think of a company’s past performance and future prospects? a. Cash flow ratios b. Liquidity ratios c. Asset management ratios d. Market value ratios e. Profitability ratiosarrow_forwardWhich of the following is an idicator of financial risk ? a) Net Sales / Total Assets b) Total Liabilities / Equity c) Return on Assets d) Return on Equityarrow_forward
- Financial statement analysis is used to evaluate a firm's liquidity position, solvency position, and profitability position. Respond to this statement with supporting arguments.arrow_forwardAn analyst who is interested in assessing a company’s fi nancial position is most likely to focus on which fi nancial statement? A . Balance sheet.arrow_forwardDiscuss your assumptions on the key factors such as industry characteristics, firm characteristics, sales growth, profit margin, dividend policy, asset requirement, and leverage. How do these factors affect your forecasting of financial statements? And discuss why the circular reference occurs between the proforma income statement and balance sheet in your forecasting model?arrow_forward
- You are trying to assess the well-being of the common stockholders of a company. Which of the following ratios would help you make such an assessment?(a) Debt ratio(b) Current ratio(c) Book value per share(d) Total asset turnoverarrow_forwardMatch the ratio to the building block of financial statement analysis to which it best relates.A. Liquidity and efficiency B. Solvency C. Profitability D. Market prospects Dividend yieldarrow_forwardWhat is the basic objective in looking at trends in financial ratios and other data?arrow_forward
- When assessing a company’s Credit Risk, analysts use financial ratios to determine liquidity and solvency IS IT TRUE?arrow_forwardWhat's the importance of considering the audience for financial statement analysis?arrow_forwardWhat are the siginificance of financial ratios (i.e. current ratio; DSO; TATO; profit margin; ROA; ROI)? How do they help us interpert financial data? What are the differences between ratios (i.e. profiability; liquidity; leverage)? What information do they provide for us?arrow_forward
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