Question

Class, here’s a great opportunity for a peer response. Take a look at the ratios below....

Class, here’s a great opportunity for a peer response. Take a look at the ratios below. Select a category and examine how these ratios might be useful to an external financial statement user: Liquidity Ratios Working Capital = Current Assets – Current Liabilities Current Ratio = Current Assets / Current Liabilities Quick Ratio = (Current Assets – Inventory) / Current Liabilities Long-Term Solvency Ratios Debt to Assets Ratio = Total Liabilities / Total Assets Debt to Equity Ratio = Total Liabilities / Total Equity Interest Coverage Ratio = Earnings before interest and taxes / Interest Expense

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Liquidity ratios tells us how the company financial position would be in near future. whether in near future company would be able to meet its current liabilities.liquidity Ratios include Current Ratio and Quick Ratio Working Capital Ratio.

Solvency Ratio Include the financial Ratios which tells the company financial position in long run. It tells whether in coming future (1 year) company would be able to meet its future obligations and liabilities. Basically Liquidity Ratios are for short term and solvency ratios are for long term.

Interest coverage Ratios tells us whether the company profits are sufficient to pay the interest expense that the company is incurring.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Class, here’s a great opportunity for a peer response. Take a look at the ratios below....
Class, here’s a great opportunity for a peer response. Take a look at the ratios below. Select a category and examine how these ratios might be useful to an external financial statement user: Profitability Ratios Gross Profit Rate = Gross Profit / Sales Return on Equity = Net Income / Average Common Stockholders’ Equity Return on Sales = Net Income / Sales Earnings per Share = (Net Income – Preferred Dividends) / Average Common Shares of Stock Outstanding Market Price...
Compute and Interpret Liquidity, Solvency and Coverage Ratios Selected balance sheet and income statement information for...
Compute and Interpret Liquidity, Solvency and Coverage Ratios Selected balance sheet and income statement information for Calpine Corporation for 2004 and 2006 follows. ($ millions) 2004 2006 Cash $ 1,256.73 $ 1,523.36 Accounts receivable 1,097.16 735.30 Current assets 3,313.56 3,268.33 Current liabilities 3,285.39 6,057.95 Long-term debt 17,150.81 3,531.63 Short-term debt 1,033.96 4,568.83 Total liabilities 22,898.42 25,503.17 Interest expense 1,516.90 1,288.29 Capital expenditures 1,545.48 211.50 Equity 4,587.67 (7,152.90) Cash from operations 19.89 335.98 Earnings before interest and taxes 1,659.84 1,907.84 (a)...
Compute and Interpret Liquidity, Solvency and Coverage Ratios Selected balance sheet and income statement information from...
Compute and Interpret Liquidity, Solvency and Coverage Ratios Selected balance sheet and income statement information from Verizon Communications Inc. follows. ($ millions) 2016 2015 Current assets $ 26,395 $ 22,355 Current liabilities 30,340 35,052 Total debt 108,078 109,729 Total liabilities 220,148 226,333 Equity 24,032 17,842 Earnings before interest and taxes 27,059 33,060 Interest expense 4,376 4,920 Net cash flow from operating activities $ 22,715 $ 38,930 Round all your answers to two decimal places. (a) Compute the current ratio for...
For each of the following financial statement ratios, identify whether the ratio provides analysis regarding a...
For each of the following financial statement ratios, identify whether the ratio provides analysis regarding a firms: Profitability Liquidity Solvency Common stockholder valuation Earnings Per Share (EPS) Quick ratio Gross profit percentage (or margin) Dividend Yield Price to Earnings ratio Accounts receivable turnover Operating cash flow to current liabilities ratio Days' sales in inventory Debt to Equity ratio Return on sales Return on assets Current ratio
Go to the Internet and find the following ratios for McDonald Corporation (MCD). Give the source...
Go to the Internet and find the following ratios for McDonald Corporation (MCD). Give the source of your information. Ratio Formula Calculation Ratio Liquidity Current total current assets / total current liabilities Quick, or Acid Test (current assets - inventories) / current liabilities Asset Management Inventory Turnover cost of goods sold / Inventories (average) Days sales outstanding Receivables / Sales per day Fixed assets turnover Annual sales / Net Fixed assets (average) Total assets turnover Annual sales / total assets...
Compute and Interpret Liquidity and Solvency Ratios Selected balance sheet and income statement information from Comcast...
Compute and Interpret Liquidity and Solvency Ratios Selected balance sheet and income statement information from Comcast Corporation for 2015 and 2014 follows ($ millions). Total Current Assets Total Current Liabilities Income Before Interest and Taxes Interest Expense Total Liabilities* Stockholders' Equity *Includes redeemable noncontrolling interests 2015 $12,653 $18,178 $16,023 $2,702 $112,596 $54,828 2014 13,881 17,410 15,351 2,617 106,118 53,918 a. Compute the current ratio for each year. Round answers to two decimal places. Current Ratio 2015 Answer 2014 Answer b....
Compute and Interpret Liquidity and Solvency Ratios Selected balance sheet and income statement information from Comcast...
Compute and Interpret Liquidity and Solvency Ratios Selected balance sheet and income statement information from Comcast Corporation for 2015 and 2014 follows ($ millions). Total Current Assets Total Current Liabilities Income Before Interest and Taxes Interest Expense Total Liabilities* Stockholders' Equity *Includes redeemable noncontrolling interests 2015 $12,453 $18,178 $15,823 $2,702 $112,596 $54,578 2014 13,681 17,410 15,151 2,617 106,118 53,668 a. Compute the current ratio for each year. Round answers to two decimal places. Current Ratio 2015 Answer 2014 Answer b....
Compute and Interpret Liquidity and Solvency Ratios Selected balance sheet and income statement information from Comcast...
Compute and Interpret Liquidity and Solvency Ratios Selected balance sheet and income statement information from Comcast Corporation for 2015 and 2014 follows ($ millions). Total Current Assets Total Current Liabilities Income Before Interest and Taxes Interest Expense Total Liabilities* Stockholders' Equity 2015 $12,303 $18,178 $15,673 $2,702 $112,596 $53,978 2014 13,531 17,410 15,001 2,617 106,118 53,068 *Includes redeemable noncontrolling interests a. Compute the current ratio for each year. Round answers to two decimal places. Current Ratio 2015 2014 b. Compute times...
Below is selected balance sheet and income statement information from Scott & Company. (in millions) 2014...
Below is selected balance sheet and income statement information from Scott & Company. (in millions) 2014 2012 Cash $ 1,483.36 $   1,536.73 Accounts receivable 735.30 1,097.16 Current assets 2,918.33 3,913.56 Current liabilities 6,157.95 3,385.39 Long-term debt 3,611.63 17,620.81 Short-term debt 4,568.83 1,033.96 Total liabilities 26,363.17 23,218.42 Interest expense 1,338.29 1,566.90 Capital expenditures 211.50 1,545.48 Equity -7,152.90 4,587.67 Cash from operations 185.98 110.89 Earnings before interest and taxes 1,902.84 1,594.84 a. Compute the following liquidity, solvency and coverage ratios for both...
Financial? ratios: Liquidity.??The financial statements for Tyler? Toys, Inc. are shown in the table below. Calculate...
Financial? ratios: Liquidity.??The financial statements for Tyler? Toys, Inc. are shown in the table below. Calculate the current? ratio, quick? ratio, and cash ratio for Tyler Toys for 2013 and 2014. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the? shareholders? Tyler Toys, Inc. Income Statement for Years Ending December 31, 2013 and 2014 2014 2013 Revenue $14,146,314 $13,566,585 Cost of goods sold $-8,448,624 $-8,132,222 Selling, general, and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT