Answered: Why are financial ratios important data…

Business

Finance

Why are financial ratios important data for managers to consider when making business decisions?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 2Q: Explain how to differentiate short-term decisions from long-term decisions of a business and the...

See similar textbooks

Related questions

Q: Alyssa sold 38 furniture sets during August. Her target for September is to sell 15% more furniture…

A: Solution:Percentage increase means the increase in base value with reference to the per hundred…

Q: suppose the real intrest rate is 2.5% and the inflation rate is 7% . what is the nominal intrest…

A: Solution:Nominal interest rate means rate of return after adjustment of inflation rate in the real…

Q: Anzio, Inc., has two classes of shares. Class B has 10 times the voting rights as Class A. If you…

A: Assuming that Anzio has 100 voting rights for Class A shares. Therefore, the number of voting rights…

Q: Acme Annuities recently offered an annuity that pays 5.49% compounded monthly. What equal monthly…

A: Solution:-When an equal amount is deposited each period, it is called annuity.We know, future value…

Q: Given, Sales : $250,000 Costs : $134,000 Depreciation : $10,200 Operating expenses : $6,000…

A: Operating cash flows is the cash flows generated from normal operations - selling and distributing…

Q: In response to customer complaints about rising prices of food items, a supermarket responds by…

A: Coupons are the discounts given to customers to promote the sales of the company and this is one way…

Q: Kiwi Pro’s common stock currently sells for $8.78 per share. The company executives anticipate a…

A: According to Gordon's growth model ,Po = wherePo = current stock priceD1 = Dividend of next yearr =…

Q: Jupiter Explorers has $8,200 in sales. The profit margin is 5 percent. There are 5,200 shares of…

A: PE Ratio is also known as Price Earning ratio. It shown the relationship between the price of the…

Q: As a bond fund manager, you are considering 10-year corporate bonds issued by Mellon Bank (MB). Each…

A: Price of the bond is the PV of annual coupons and par value discounted the YTM.

Q: Deprey, Incorporated, had equity of $220,000 at the beginning of the year. At the end the year, the…

A: When the average value of equity is measured, and the net income is divided by it, the resulting…

Q: Required: Solve numerically for the proportions of each asset and for the expected return and…

A: Optimal risky portfolio represents the portfolio that offers the highest expected return for a given…

Q: You invested $12,396.22 in Hawkeye Hats, Inc. four years ago. You sold the stock today for…

A: Solution:Cumulative Annual Growth Rate is the constant rate which represents the average annual rate…

Q: If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest semiannually…

A: A bond is a debt instrument issued by companies. The issuing company pays periodic interest or…

Q: Portman Industries just paid a dividend of $1.92 per share. The company expects the coming year to…

A: Here, Current Dividend $ 1.92Growth Rate for 1 year20%Constant growth Rate after 1…

Q: On January 1, 2022, Slack Company finished legal services and accepted in exchange a 5% $400,000…

A: A promissory note is a short-term financing means of the company, which is usually issued to fund…

Q: Kelly's Corner Bakery purchased a lot in Oil City six years ago at a cost of 100000. Today, that lot…

A: initial cash flow is the cash flow incurred at the beginning of the year. It is required to start…

Q: Show your excel workings for the following problems. Round up to two decimal places if necessary. 1.…

A: Value of stock can be determined based on the dividend and growth of dividend and based on required…

Q: A perpetuity of $1 each year, with the first payment due immediately, has a present value of $25 at…

A: Perpetuity is payment forever and continuous payments and immediate annuity start with payment…

Q: Amalgamated Industries 5.4% bonds pat interest annually. The bonds sell for $990 and have a par…

A: Coupon Rate = c = 5.4%Price of Bond = pv = $990Face Value = fv = $1000Time = nper = 30 Years

Q: Find the APR, rounded to the nearest tenth of a percent (one decimal place) for the loan. Purchase a…

A: Variables in the question:Purchase value=$ 4900 Rate=8%N=4 yearsWorking Note#1No. of payments=4…

Q: Suppose a ten-year, $1,000 bond with an 8.8% coupon rate and semiannual coupons is trading for…

A: We need to use RATE function in excel to calculate yield to maturity of bond=RATE(NPER,PMT,-PV,FV)To…

Q: Hewlard Pocket's market value balance sheet is given. Assets A. Original balance sheet Cash Other…

A: Stock price after cash dividend can be calculated by using equation belowStock price after cash…

Q: Required information Section Break (8-11) [The following information applies to the questions…

A: A minimum variance portfolio is an investment technique that minimizes the risk and maximizes the…

Q: Time Value Personal Finance Problem Misty needs to have $21,000 in 7 years to fulfill her goal of…

A: The concept of time value of money will be used here. As per the concept of time value of money any…

Q: nk will lend you $4,000 for 45 days at a cost of $50 interest. What is your effective rate of…

A: Effective interest rate is the interest rate after considering the impact of compounding on interest…

Q: Folic Acid Inc. has $28 million in earnings, pays $3.8 million in interest to bondholders, and $2.4…

A: Solution:Common stockholders of an entity have the residual claim over the earnings of the entity…

Q: The current zero-coupon yield curve for risk-free bonds is as follows: 1 4.98% Maturity (years) YTM…

A: The price of a zero coupon bond can be calculated by

Q: If the spot rate of MXN turns out to be $0.085 on 1/1/X1, the net cash flow of a US importer from…

A: Exchange rate is rate at which currency is exchanged with other currency and that depends on…

Q: A trader buys a call option with a strike price of $30 for $3. Does the trader ever exercise the…

A: Solution:Call option means right to buy the underlying asset at exercise price at maturity. To…

Q: Your bank offers a savings account that pays 2.5% interest, compounded annually. If you invest…

A: Future value refers to the value of an investment or cash flow at a specified point in the future.…

Q: The market price of a semi-annual pay bond is $986.15. It has 15.00 years to maturity and a yield to…

A: Compound = Semiannually = 2Price of Bond = pv = $986.15Time = t = 15 * 2 = 30Yield to Maturity = r =…

Q: Interest on Credit Cards. Eileen, who is currently paying $1,210 per year in finance charges to her…

A: Money has time value and money today will not be same tommorrow will loose value with time.

Q: MM's model that included the existence of corporate taxes concluded that 100% Alumiscape Corporation…

A: The relationship between a company's capital structure and value is established by Modigliani…

Q: Owen's Electronics has nine operating plants in seven southwestern states. Sales for last year were…

A: STEP 1By taking into account the expenses associated with creating and selling products, profit…

Q: You are going to value Lauryn's Doll Co. using the FCF model. After consulting various sources, you…

A: It refers to the amount of money left for the firm after paying all the operating expenses and…

Q: Using the Hard Currency Credit Calculator: 10-year US Treasury yields 3.25%. Nar credit spread is…

A: Price of bond is the present value of coupon payments plus present value of face value of bond based…

Q: vestment of $2.31 million. The fixed asset will be depr s three-year tax life, after which time it…

A: NP3 is the difference between the projected value of cash flow and initial investment and it must be…

Q: nsider a 30 year mortgage for $310873 at an annual interest rate of 3.5%. What is the remaining…

A: Mortgage loans are common in buying homes because are easy to get and easy to pay be monthly…

Q: White Lion Homebuilders has a current stock price of $27 per share, and is expected to pay a…

A: Current stock price = $27Flotation cost = 3.90%Expected dividend = $4.60Growth rate = 5.10%

Q: Bell Brothers has $3,000,000 in sales. Its fixed costs are estimated to be $200,000, and its…

A: EPS is also known as Earnings per share. It is the part of profit which is given to the shareholders…

Q: Operating cash inflows A firm is considering renewing its equipment to meet increased demand for its…

A: Net Present Value is also known as NPV. It is a capital budegting techniques which help in decision…

Q: Bond valuation Annual interest Calculate the value of the bond shown in the following table,…

A: The value/price of bond is present value of all coupon payments and present value of face valueBond…

Q: Billabong Tech uses the internal rate of return (IRR) to select projects. Calculate the IRR for each…

A: IRR is also known as Internal Rate of return. It is a capital budegting technique which helps in…

Q: Suppose an individual wants to have $200,000 available for her child's education. Find the amount…

A: The concept of time value of money will be used here. As per the concept of time value of money any…

Q: On a typical day, a company writes 52 checks worth a total of $8,025 that clear in 2.25 days. The…

A: Disbursement float is generated when a company writes a check, causing a decrease in book balance…

Q: You are given the following information concerning three portfolios, the market portfolio, and the…

A: The Sharpe Ratio and Treynor Ratio serve as valuable tools for assessing the risk-adjusted…

Q: aggie's Muffins Bakery generated $2 million in sales during 2019, and its yea d total assets were…

A: Sustainable growth rate is which can be obtained without any external funding required in form of…

Q: se you recently bought a house for R1 650 000 and secured a home loan from the bank, with an…

A: Mortgage loans are paid by equal monthly installments and these carry the payment for interest and…

Q: You have written a call option on Walmart common stock. The option has an exercise price of $81, and…

A: Options are financial derivatives that give the holder the right, but not the obligation, to buy or…

Q: As a bond fund manager, you are considering 10-year corporate bonds issued by Mellon Bank (MB). Each…

A: Price of the bond is the PV of annual coupons and par value discounted the YTM.

Question

Why are financial ratios important data for managers to consider when making business decisions?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Importance of financial ratios:

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Monitoring By the Board of Directors and Others

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Which of the following is true about earnings management? A. It works within the constraints of GAAP. B. It works outside the constraints of GAAP. C. It tries to improve stakeholders views of the companys financial position. D. Both B and C E. Both A and C
What are some qualitative factors that analysts should consider when evaluating a company’s likely future financial performance?
Explain how to differentiate short-term decisions from long-term decisions of a business and the changes in analyses that influence these decisions.
Why is it sometimes misleading to compare a company’s financial ratios with those of other firms that operate in the same industry?
People affected by decisions made by a company, including Investors, creditors, employees, managers, regulators, customers, suppliers, and laypeople, are known as ________. A. quantitative factors B. qualitative factors C. stakeholders D. stockholders
Which of the following is nor a common goal of an organization? A. operational efficiency B. being acquired by another business C. achieving strategic goals D. measuring financial performance
How may analyzing sales and receivables provide information about a firms profitability?
An important goal of a responsibility accounting framework is to help ensure which of the following? A. decision-making is made by the top executives. B. investments made by each segment are minimized. C. identification of operating segments that should be closed. D. segment and company financial goals are congruent.
Choose a company and explain how a specific issue, policy, or procedure (for example, granting merchandise returns, establishing sales prices) might look if the business is structured as a decentralized business.
Managers in decentralized organizations make decisions relating to all of the following except_______. A. the companys stock price B. equipment purchases C. personnel D. prices to charge customers