Loose Leaf for Foundations of Financial Management Format: Loose-leaf
17th Edition
ISBN: 9781260464924
Author: BLOCK
Publisher: Mcgraw Hill Publishers
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Textbook Question
Chapter 3, Problem 5DQ
Is there any validity in rule-of-thumb ratios for all corporations, such as a current ratio of 2 to 1 or debt to assets of 50 percent? (LO3-2)
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Compose a financial analysis based on your evaluation of the ratios. For EACH of the five (5) classifications of ratios. one paragraph.
3A. Comparison between 2020E and 2019 ratios -
(a) Liquidity ratios
(1) What happened? Did each of the ratios increase, decrease, or not change?
(2) What had caused the movement or non-movement for each ratio? and
(3) Is this a good thing or a bad thing for the company?
(b) Solvency ratios
(1) What happened? Did each of the ratios increase, decrease, or not change?
(2) What had caused the movement or non-movement for each ratio? and
(3) Is this a good thing or a bad thing for the company?
(c) Asset utilization ratios
(1) What happened? Did each of the ratios increase, decrease, or not change?
(2) What had caused the movement or non-movement for each ratio? and
(3) Is this a good thing or a bad thing for the company?
(d) Profitability ratios
(1) What happened? Did each of the ratios increase, decrease, or not change?
(2) What had caused the movement or…
2.1 Use the information provided below to calculate the ratios for 2022 (expressed to two decimal places) that would reflect each of the
following:
2.1.1 The profit of the company relative to sales after deducting the cost of sales.
2.1.2 The ability of the company to profitably utilize its capital, which includes both debt and equity.
2.1.3 The proportion of the total assets that are financed by total debt.
2.1.4 The ability of the company to repay its short-term debts under distress conditions, on the assumption that inventories would
have no value at all.
2.1.5 The portion of the company's profit that is allocated to each outstanding ordinary share.
2.1.6 An indication of the percentage of profit that has been put back into the company.
2.2 Comment on the following ratios that have been calculated for Zorro Ltd:
2.2.1 Profit margin
2.2.2 Return on equity
INFORMATION
Excerpts of the financial data of Zorro Ltd for 2022 are as follows:
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR…
Describe” the Ch9 - return on assets ratio. Explain the factors used in the formula, how the ratio assists the investor in evaluating a company’s performance, and whether it assesses liquidity, solvency, or profitability. Using the numbers in the recent Balance Sheet (Statements of Financial Position) and Income Statement (Statement of Operations) of a U.S. public corporation (state page numbers from the Form 10-K Annual Report), show your calculation and “analyze” the return on assets ratio for a public corporation and its competitor. Describe if the company is doing well in comparison to its competitor’s ratio results.
Chapter 3 Solutions
Loose Leaf for Foundations of Financial Management Format: Loose-leaf
Ch. 3 - If we divide users of ratios into short-term...Ch. 3 - Explain how the Du Pont system of analysis breaks...Ch. 3 - If the accounts receivable turnover ratio is...Ch. 3 - Prob. 4DQCh. 3 - Is there any validity in rule-of-thumb ratios for...Ch. 3 - Why is trend analysis helpful in analyzing ratios?...Ch. 3 - Inflation can have significant effects on income...Ch. 3 - What effect will disinflation following a highly...Ch. 3 - Why might disinflation prove favorable to...Ch. 3 - Comparisons of income can be very difficult for...
Ch. 3 - Low Carb Diet Supplement Inc. has two divisions....Ch. 3 - Database Systems is considering expansion into a...Ch. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Dr. Zhivà€go Diagnostics Corp.’s income...Ch. 3 - The Haines Corp. shows the following financial...Ch. 3 - Easter Egg and Poultry Company has $2,000,000 in...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - Baker Oats had an asset turnover of 1.6 times per...Ch. 3 - AllState Trucking Co. has the following ratios...Ch. 3 - Front Beam Lighting Company has the following...Ch. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Jerry Rice and Grain Stores has $4,780,000 in...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Jim Short’s Company makes clothing for schools....Ch. 3 - The balance sheet for Stud Clothiers is shown...Ch. 3 - The Lancaster Corporation’s income statement is...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - The Global Products Corporation has three...Ch. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - The following information is from Harrelson...Ch. 3 - Using the financial statements for the Snider...Ch. 3 - Given the financial statements for Jones...Ch. 3 - Prob. 2WE
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- Which of the following ratios is(are) useful in assessing a company's ability to meet current maturing or short-term obligations? Acid-Test Ratio Debt to Total Assets Ratio a. Yes No b. Acid-Test Ratio Debt to Total Assets Ratio No No O c. Acid-Test Ratio Debt to Total Assets Ratio Y es No d. Acid-Test Ratio Debt to Total Assets Ratio Yes Yesarrow_forwardCompose a financial analysis based on your evaluation of the ratios. For EACH of the five (5) classifications of ratios. EXPLAIN IN ONE PARAGRAPH EACH. 3A. Comparison between 2020E and 2019 ratios - (d) Profitability ratios (1) What happened? Did each of the ratios increase, decrease, or not change? (2) What had caused the movement or non-movement for each ratio? and (3) Is this a good thing or a bad thing for the company? (e) Market performance ratios) (1) What happened? Did each of the ratios increase, decrease, or not change? (2) What had caused the movement or non-movement for each ratio? and (3) Is this a good thing or a bad thing for the company?arrow_forwardUse the information provided from Sapphire Ltd to calculate the ratios for 2022 (expressed to two decimal places) that would reflect each of the following:1. The profit of the company relative to sales after deducting the cost of sales.2. The ability of the company to profitably utilize its capital, which includes both debt and equity.3. The proportion of the total assets that are financed by total debt.4. The ability of the company to repay its short-term debts under distress conditions, on the assumption that inventories would have no value at all.5. The portion of the company's profit that is allocated to each outstanding ordinary share.6. An indication of the percentage of profit that has been put back into the company.arrow_forward
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Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License