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Explain what the significance of having a high/low Price-to-Book ratio means about the company's anticipated growth or decline.
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- Which of the following statements is most correct? Select one: A. A company with a current ratio of 0.5, should purchase additional inventory on credit if it wants to improve this ratio. B. Return on assets is a function of two variables, the profit margin and current asset turnover. C. A company with a current ratio of 0. 5, should sell some of the existing inventory at cost if it wants to improve this ratio. D. Firms with low rates of return on stockholders’ equity tend to sell at relatively high ratios of market price to book value.What does the price/earnings (P/E) ratio show? If one firm’s P/E ratio is lower thanthat of another firm, what factors might explain the difference?If a sales increase is forecasted, how will it affect expenses on the pro forma income statement if market conditions are expected to remain stable
- If one firm is growing rapidly and another is not, how might this distort a comparisonof their inventory turnover ratios?What does the inventory turnover period ratio measure? Select one: a.Profitability. b.The average time an organisation holds inventory. c.The liquidity of the firm. d.How much the firm's current assets could decrease and still leave it able to pay its current liabilities.Which of the following actions will increase a company's quick ratio? (a) Reduce inventories and use the proceeds to reduce long-term debt.(b) Reduce inventories and use the proceeds to reduce current liabilities.(c) Issue short-term debt and use the proceeds to purchase inventory.(d) Issue equity and use the proceeds to purchase inventory.
- From the following: What is the industry average price–earnings ratio? What is Ragan’s price-earnings ratio? And Comment on any differences and explain why they may exist.Explain whether the following situations, taken independently, would be favorable or unfavorable: ( a ) increase ingross profit percentage, ( b ) decrease in inventory turnoverratio, ( c ) increase in earnings per share, ( d ) decrease indays to collect, and ( e ) increase in net profit margin.Show with a formula that describes the average estimatesustainable sales growth. Then, make a clear description and systematically about the relationship between its variables. What if a company doesn't experiencing “retention profit”?
- Which of the following typically is true for profitability ratios? a. Growth stocks have lower price to earnings ratios.b. Companies in more competitive industries have higher profit margins.c. The gross profit ratio declines as competition increases.d. When a company has debt, its return on equity will be lower than its return on assets.Explain how LIFO, FIFO, and Weighted average inventory systems will have different affects on a firm’s income statement and balance sheet. If a firm was concerned about reducing their tax burden, which inventory system would best benefit them? Assume costs have been steadily rising over time.The P/E ratio is most useful in .... : Comparing the premium that the market places on the total dollar value of earnings among competitors. Comparing the premium that the market places on the total dollar value of earnings per share among competitors. Comparing the return on earnings among competitors. Forecasting the future earnings of a company.
