Pecunious Products, Incorporated’s financial results for the past three years are summarized below: Year 3Year 2Year 1Sales trend128.0115.0100.0Current ratio2.52.32.2Acid-test ratio0.80.91.1Accounts receivable turnover9.410.612.5Inventory turnover6.57.28.0Dividend yield7.1%6.5%5.8%Dividend payout ratio40%50%60%Dividends paid per share*$ 1.50$ 1.50$ 1.50*There have been no changes in common stock outstanding over the three-year period. Required:Is the level of inventory increasing, decreasing, or remaining constant? Is the market price of the company’s stock going up or down? (pls expound)

Inventory turnover is an economic statistic that shows how many times a firm's inventory is sold and…

Answered: Pecunious Products, Incorporated’s…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter8: Liabilities And Stockholders' Equity

Section: Chapter Questions

Problem 8.8.7MBA

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Pecunious Products, Incorporated’s financial results for the past three years are summarized below:

	Year 3	Year 2	Year 1
Sales trend	128.0	115.0	100.0
Current ratio	2.5	2.3	2.2
Acid-test ratio	0.8	0.9	1.1
Accounts receivable turnover	9.4	10.6	12.5
Inventory turnover	6.5	7.2	8.0
Dividend yield	7.1%	6.5%	5.8%
Dividend payout ratio	40%	50%	60%
Dividends paid per share*	$ 1.50	$ 1.50	$ 1.50

*There have been no changes in common stock outstanding over the three-year period.

Required:

Is the level of inventory increasing, decreasing, or remaining constant? Is the market price of the company’s stock going up or down? (pls expound)

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