Imagine that you’ve been asked to explain 1 of the major accounting ratios to a group of high school students who have no background in business or accounting but are eager to learn. Choose 1 of the following ratios and describe how you would explain it in your own words, using a specific example: current ratio
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Imagine that you’ve been asked to explain 1 of the major accounting ratios to a group of high school students who have no background in business or accounting but are eager to learn. Choose 1 of the following ratios and describe how you would explain it in your own words, using a specific example:
current ratio - asset turnover
- profit margin on sales
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- In a minimum of 175 words Imagine that you’ve been asked to explain 1 of the major accounting ratios to a group of high school students who have no background in business or accounting but are eager to learn. Choose 1 of the following ratios and describe how you would explain it in your own words, using a specific example: current ratio asset turnover profit margin on salesYou have been asked by your CEO to evaluate, analyze and calculate commonly used ratios relating to a company’s profitability, liquidity, solvency and management efficiency. Requirement: Complete the balance sheet and sales data (fill in the blanks), using the following financial data: Debt/net worth 60% x 37,000 = 22,200 (debt) = AP Acid test ratio 1.2 x 22,200 = 26,640 Asset turnover 1.5 times Day sales outstanding in accounts receivable 40 days Gross profit margin 30% Inventory turnover 6 times Balance sheet Cash…You have been asked by your CEO to evaluate, analyse and calculate commonly used ratios relating to a company’s profitability, liquidity, solvency and management efficiency. Requirement: ⦁ Complete the balance sheet and sales data (fill in the blanks), using the following financial data: Debt/net worth 60%Acid test ratio 1.2Asset turnover 1.5 timesDay sales outstanding in accounts receivable 40 daysGross profit margin 30%Inventory turnover 6 times Balance sheet Cash ________ Accounts payable ________Accounts receivable ________ Common stock RM15,000Inventories ________ Retained earnings RM22,000Plant & equipment ________ Total assets ________ Total liabilities ________& capitalSales ________Cost of goods sold ________ ⦁ Explain how do analysts use ratios to analyse a firm’s leverage? Which ratios convey more important information to a credit analyst those revolving around the levels of indebtedness or those measuring the ability to service debt? What is the relationship between…
- You have been asked by your CEO to evaluate, analyze and calculate commonly used ratios relating to a company’s profitability, liquidity, solvency and management efficiency. Requirement: Complete the balance sheet and sales data (fill in the blanks), using the following financial data: Debt/net worth 60% Acid test ratio 1.2 Asset turnover 1.5 times Day sales outstanding in accounts receivable 40 days Gross profit margin 30% Inventory turnover 6 times Balance sheet Cash ________ Accounts…Please take a look below at the two companies' financial ratios. Use the material your learned in the chapter to try and identify the industries these two companies operate in. You are going to be graded on the quality of your analysis and arguments (e.g. this ratio indicates that... and that ratio indicates the other,... and taken together these ratios indicate that.... (and so forth)) : Company A Company B P/E Ratio: 30 Price/Sales: 6 Price/Book Value of Equity: 7.5 Profit Margin: 20% Operating Margin: 25% Return on Assets (ROA): 6% Return On Equity (ROE): 25% Current Ratio: 3 P/E Ratio: 17 Price/Sales: 0.6 Price/Book Value of Equity: 3 Profit Margin: 3% Operating Margin: 5% Return on Assets (ROA): 7% Return On Equity (ROE): 15% Current Ratio: 1- Please refer to the following Income Statement and Balance Sheet (see attached picture): Prepare a vertical analysis for both the income statement and balance sheet. Write a paragraph comparing the company’s performance with the industry average. Compute the following ratios and comment on what the results mean when evaluating the company: Current ratio Gross profit percentage ratio Debt ratio Profit margin ratio
- Paul Sabin has also gathered the following financial data and ratios that are typical of companies in the electronics industry: Current Ratio 2.5 Acid-Test Ratio 1.3 Average Collection period 18 Days Average Sales Period 60 Days Debt-to-Equity Ratio 0.90 Times Interest Earned Ratio 6.0 Comment on the results of your analysis (1) and (2) from the screenshots and images shown and compare Sabin Electronics’ performance to the benchmarks from the electronics industry. Do you think that the company is likely to get its loan application approved?Alex is currently considering to invest his money in one of the companies betweenCompany A and Company B. The summarized final accounts of the companies for theirlast completed financial year are as follows : (please check the images) a. Calculate the following ratios for Company A and Company B. State clearly theformulae used for each ratio:i. Gross Profit Marginii. Net Profit Marginiii. Inventory Turnover Period (days) + Comment on each of the ratios calculated in part (a) above.Read and understand the financial statements of Green Valley Merchandising, Compute for the following ratios of the said business entity: 1. Profitability Ratios a) Gross Profit Margin b) Return on Equity c) Return on Assets 2. Leverage Ratio a) Debt-to-Equity 3. Liquidity Ratios a) Current Ratio b) Quick-Asset Ratio
- Please select THREE of the ratios listed below and perform them for years 2012 and 2011. Please interpret the data by including the following: (1) Write out the formula for each ratio you selected and show your calculations. (2) Discuss whether each ratio you selected measures liquidity or profitability and what those terms mean. (3) What factor(s) contributed to the increase or decrease from last year? Discuss whether those changes were favorable or unfavorable to the company and why? (4) What does each of your calculated ratios potentially mean for the company’s overall financial condition? Please assume the market price of the common stock on 12/31/11 was $113.40. Also, if you need any numbers from 2010 for averages, please use the following: Cash 300,000 Marketable securities 1,000,000 A/R 345,000 Inventory 647,000 Prepaids 220,000…Compare and contrast the four categories of financial ratios we discussed in class. Discuss how the business owners and potential investors could benefit from these ratios. What are clear indicators of success vs. poor operations?URGENT !! Use the ratios and the financial information listed below and calculate and comment on 5 of the ratios. Note the industry average for the ratio is given below to aid in your discussion. (A simple answer of the company is better than the industry is not sufficient) Current ratio (current assets / current liabilities) - Industry Average 2 : 1 Working capital (current assets – current liabilities) - Industry Average $60,000 Accounts receivable turnover (net credit sales / average accounts receivable) - Industry Average 17.25 Average collection period (365 days / accounts receivable turnover) – Industry Average 21 Days Inventory turnover (cost of goods sold / average inventory) - Industry Average 8.5 Days in inventory (365 days / inventory turnover) - Industry Average 43 Days Debt to assets ratio (total liabilities / total assets) - Industry Average 45% Free cash flow (net cash provided by operating activities – capital expenditures – cash dividends) - Industry Average…