FINANCIAL ACCT-CONNECT
FINANCIAL ACCT-CONNECT
8th Edition
ISBN: 9781266627903
Author: Wild
Publisher: INTER MCG
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Ratio Industry Ratios GnG Ratios 1. Current Ratio 5.3   2. Acid Test Ratio 5.1   3. Gross Profit Ratio 30%   4. Net Income Margin 7.5%   5. Receivable Turnover Ratio 9   6. Return on Asset Ratio 12%   7. Debt to Asset Ratio 1:4     Interpretation and verbal analysis compared to industry ratios: 1. Liquidity   2. Profitability   3. Solvency   Computations:
Methodology:• Based on the above information the consulting group will conduct ratio analysis for the following ratios:o Current ratio o Receivable’s turnover o Times’s interest earned o Profit margin o Days in inventory o Return on assets o Cash current debt coverage ratio • As a next step the group will compare the ratios calculated above with industry benchmarks. The benchmarks are indicated within brackets besides each ratio.o Current ratio (3 to 1) o Receivable’s turnover (13 times) o Times’s interest earned (9 times) o Profit margin (12%) o Days in inventory (50 days) o Return on assets (12%) o Cash current debt coverage ratio (2 times
Q2: MULTIPLE-CHOICE QUESTIONS – Financial Ratios Analysis 1- In order to assess a company's ability to fulfill its long-term obligations, an analyst would most likely examine: A. activity ratios. B1. Solvency ratio ç. liquidity ratios.
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Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License