Why is the quick ratio frequently a betterindicator than the current ratio of a firm’s ability to pay its bills?

Q: Is there an easily identifiable debt-equity ratio that will maximize the value of a firm? Why or why…

A: No, there is no such ratios.

Q: Which risk ratios best answer each of the following financial questions? a. How quickly is a company…

A: Risk Ratio: This ratio indicates the health of the company. Here health means that the capital…

Q: How can inflation affect the comparability of financial ratios between firms? Explain your answer

A: Introduction: Usually, inflation is nothing but an increase in prices of most regular or widely used…

Q: What was the trend in net borrowing (proceeds from borrowing less payments of short- and long-term…

A: Short-term debt is debt that has a maturity of less than 1 year. This is recorded under "current…

Q: What is the difference between the ratios that use the market price and the other ratios? Why might…

A: Ratio analysis mistreatment money statements includes accounting, securities market, and management…

Q: Which one of the following is a measure of long term solvency? A. Price earning ratio B. Profit…

A: Solvency refers to a firm's ability to meet its long term financial obligations or debt.

Q: Why is the quick ratio considered by some to be a better measure of liquidity than the current…

A: The quick ratio examines a company's short-term liquidity position and assesses its ability to meet…

Q: How does additional debt in a firm influence its WACC? its free cash flow (FCF)? the agency costs of…

A: Debt is the presence of additional financial leverage in the total business and it will be having…

Q: Which one of the following statements is correct?  A.  If a firm decreases its inventory…

A: Inventory period is based on how much inventory on average you keep on hand and receivable period is…

Q: How does added debt potentially decrease the value of a firm?

A: Debt can be positive as well as negative, firms prefer to use debt in their capital structure to…

Q: What is the difference of Cost of Equity and the required rate of return on equities?

A: The amount of money that would be transferred to a company's shareholders if all of the company's…

Q: If one firm is growing rapidly and another is not, how might this distort a comparisonof their…

A: It is a financial measure that is used to evaluate as to how many times a company sells or uses its…

Q: Contrast the modern construct for FISIM with a measure that sub- tracts deposits from the financial…

A: Financial Intermediation Services Indirectly Measured (FISIM) In general, only a small part of…

Q: What is the quick ratio? Under what circumstances are short term creditors most likely to regard…

A: Liquidity ratios are important financial ratios which are used to determine the ability of the firm…

Q: What is "Basic EPS" and how is it calculated? Is this number a good indicator for future company…

A: Basic EPS: Basic earnings per share show the profit made by the company after all expense…

Q: If the firm borrows money at a significantly lower rate, this factor affects the firm's MARR. How?

A: If the firm borrows money at a lower rate then, MARR will also be lower.

Q: Why are they important for policymakers and investors, also in what situations and why do they use…

A: GDP Gross domestic product (GDP) is the measure of total value of goods and services produced within…

Q: ul? Discuss and illustrate all your answer.

A: Ratio analysis measures the association among two or more financial variables. The analyst applies…

Q: Why might it make sense for a mature, slow-growth company to have a high debt ratio

A: Mature, Slow-growth Company: These are companies established in the industry, having a strong…

Q: What value does the PEG ratio provide to financial analysts?

A: The price-to-earnings ratio of a stock is divided by the growth rate of its earnings over a given…

Q: How does the constant–growth model influence financial decisions regarding risk and return?

A: The constant growth model, or Gordon Growth Model, is a method of esteeming stock. It expects that…

Q: Briefly explain what the market to book ratio tells us about a firm

A: The market-to-book ratio (M/B ratio) is also called as P/B ratio or the price-to-book ratio. It is…

Q: Why does the WACC decrease as a firm begins to take on debt and then increase after a certain point?

A: WACC: It is also known as Weighted Average Cost of Capital. It is the mixture of weighted cost of…

Q: What caused the increase in liquidity ratios??

A: Liquidity ratios use metrics such as the quick ratio, current ratio, and operating cash flow ratio…

Q: How does GDP growth and capital inflows affect the performance of equity markets in the new…

A: Affect of GDP growth on performance of equity market:GDP is total amount of goods and services…

Q: What is WACC? Why do firms compute it? What happens to WACC when the debt level of a firm changes?

A: WACC is the weighted average cost of capital. It is the average cost of raising capital both equity…

Q: Profitability index: What is the profitability index, and why is it helpful in the capital rationing…

A:

Q: (1) Why do analysts need to consider different factorswhen evaluating a company’s ability to repay…

A: Disclaimer: “Since you have asked multiple question, we will solve the first question for you. If…

Q: Why is the following statement true? “Other things being the same, firmswith relatively stable sales…

A: Introduction: This question is related to the concept of accounting and finance. Corporate money…