What is the comparison (analysis) of the Quick Ratio of Industry Average Ratio and the Company A Ratio? The quick ratios has decreased and increased. Why? Industry Average Quick Ratios 2015: 2.78 2016: 2.82 2017: 1.48 2018: 1.21 2019: 1.54 Company A Quick Ratio 2015: 2.78 2016: 2.02 2017: 2.35 2018: 0.12 2019: 0.26

What is the comparison (analysis) of the Quick Ratio of Industry Average Ratio and the Company A Ratio? The quick ratios has decreased and increased. Why? Industry Average Quick Ratios 2015: 2.78 2016: 2.82 2017: 1.48 2018: 1.21 2019: 1.54 Company A Quick Ratio 2015: 2.78 2016: 2.02 2017: 2.35 2018: 0.12 2019: 0.26

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 91PSA: A Comparing Financial Ratios Presented below are selected ratios the four firms, Badgley is a heavy...

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A Comparing Financial Ratios Presented below are selected ratios the four firms, Badgley is a heavy equipment manu1icturer. Reagan is a newspaper publisher. Klein is a food manufacturer, and Taylor is a grocery chain. Required: 1. Which firm has the weakest current ratio? 2. CONCEPTUAL CONNECTION Explain why the turnover ratios vary so much among the four firms. 3. CONCEPTUAL CONNECTION Explain why the return on equity ratio is larger than the return on asset ratio for all four firms. 4. CONCEPTUAL CONNECTION Discuss whether the large differences in the return on equity ratios can exist over long periods of time.
What is the comparison (analysis) of the P/E Ratio of Industry Average Ratio and the Company A Ratio? The P/E Ratio has decreased and increased. Why? Industry Average, P/E RATIO 2015: 16.92x 2016: 8.29x 2017: 12.04x 2018: 10.38x 2019: 3.09x Company A, P/E RATIO 2015: 0.20x 2016: 0.32x 2017: 0.17x 2018: 0.11x 2019: 0.15x
What is the comparison (analysis) of the ROE of Industry Average Ratio and the Company A Ratio? The Total ROE ratios has decreased and increased. Why? Industry Average ROE 2015: 5.53% 2016: 6.65% 2017: 4.70% 2018: 5.64% 2019: 6.15% Company A Total ROE 2015: 3.58% 2016: 2.06% 2017: 3.79% 2018: 3.77% 2019: 2.87%
What is the comparison (analysis) of the Current Ratio of Industry Average Ratio and the Company A Ratio? The current ratios has decreased and increased. Why? Industry Average Current Ratio 2015: 3.11 2016: 3.18 2017: 1.75 2018: 1.77 2019: 2.19 Company A Current Ratio 2015: 3.02 2016: 2.25 2017: 2.56 2018: 1.74 2019: 1.60
What is the comparison (analysis) of the Basic Earning Power (BEP) of Industry Average Ratio and the Company A Ratio? The BEP ratios has decreased and increased. Why? Industry Average Basic Earning Power 2015: 4.45% 2016: 5.61% 2017: 3.90% 2018: 2.93% 2019: 4.46% Company A Basic Earning Power 2015: 3.43% 2016: 2.14% 2017: 3.66% 2018: 3.62% 2019: 3.63%
What is the comparison (analysis) of the Operating Margin of Industry Average Ratio and the Company A Ratio? The Operating Margin ratios has decreased and increased. Why? Industry Average Operating Margin 2015: 30.10% 2016: 37.75% 2017: 21.39% 2018: 18.92% 2019: 25.38% Company A Operating Margin 2015: 23.33% 2016: 15.69% 2017: 18.15% 2018: 25.06% 2019: 16.82%
Which of the following statements regarding the current ratio is true? a.The current ratio is more useful than working capital in making comparisons across companies. b.The current ratio is not useful in making comparisons with industry averages. c.Working capital is more useful than the current ratio in making comparisons across companies. d.All of these statements are true.
Compare the performance of Fly X to the Industry. For each ratio, comment on whether Fly X is positive or negative relative to the Industry. Median Industry Fly X Ratios Current Ratio 1.43X 1.45 Quick Ratio 0.84X 0.88 Total Asset Turnover Ratio 0.85 1.30 Inventory Turnover Ratio 6.15 12.10 Average Inventory Ratio 59.35 30.17 Receivables Turnover 9.82 13.08 Average Collection Period 37.17 27.90 Debt Ratio 0.52 0.39
Data for Barry Computer Co. and its industry averages follow.a. Calculate the indicated ratios for Barry.b. Construct the DuPont equation for both Barry and the industry.c. Outline Barry’s strengths and weaknesses as revealed by your analysis.d. Suppose Barry had doubled its sales as well as its inventories, accounts receivable, and common equity during 2016. How would that information affect the validity of your ratio analysis? (Hint: Think about averages and the effects of rapid growth on ratios if averages are not used. No calculations are needed.)
What is the comparison (analysis) of the Profit Margin of Industry Average Ratio and the Company A Ratio? The Profit Margin has decreased and increased. Why? Industry Average Profit Margin 2015: 23.43% 2016: 29.54% 2017: 15.81% 2018: 30.59% 2019: 22.42% Company A Profit Margin 2015: 14.67% 2016: 8.06% 2017: 9.70% 2018: 13.74% 2019: 7.65%
1. Compute the average P/E ratio of the industry. Include the ratio of all companies in the computation of industry average. 2. Assuming that Northrop's earnings is P11.50 per share, compute for the company's relative value based on the industry average P/E ratio. * 3. Assume that Grumman is the subject company and all others are comparable companies. How much must be its relative value based on the median P/BV ratio of comparable companies if its book value per share is P62? The ratio of the subject company must not be included in computing the median ratio of comparable companies. * 4. Using the the industry averages of the three ratios, would you buy Loral at its current price? (Explanation should be on the handwritten solution) * Yes No
Please see the attached graph for questions below. What is the difference between the two companies on this ratio? What is a plausible explanation as to why they would differ? Is one company clearly different than the other? Are there economic or end-market influences that explain why the ratios differ? What might they be? Over time, is each company’s overall financial performance improving, declining, or is something strange going on? Do you think evaluating financial statements is a good idea? What do you regard as some of the shortcomings of financial ratio analysis?