Question

2) What ratios assist in determining a company’s liquidity, solvency and profitability? As a potential investor, which ratios would you select to review the company and why?

Answer #1

FOR DETERMINING COMPANY LIQUIDITY FOLLOWING RATIO BECOMES HELPFUL:

CURRENT RATIO

QUICK ASSET RATIO OR ACID TEST RATIO

FOR SOLVENCY PURPOSE:

CURRENT RATIO

QUICK ASSET RATIO

INTEREST COVEREAGE RATIO

DEBT EQUITY RATIO

FIXED ASSETS TO NETWORTH RATIO

FOR PROFITABILITY :

GROSS PROFIT RATIO

NET PROFIT RATIO

RETURN ON INVESTMENT

RETURN ON EQUITY.

BEING THE INVESTOR IN EQUITY SHARES OF THE COMPANY, I WILL BE INTERESTED IN KNOWING THE PROFITABILITY AND SOLVENCY OF THE COMPANY

FOR SOLVENCY, DEBT EQUITY RATIO WILL BE HELPFUL MORE AND FOR PROFITABILITY, RETURN ON EQUITY IS RELEVANT FOR ME.

IF I AM INVESTING FINANCE BY WAY OF PROVIDING DEBT THEN,

INTEREST COVERAGE RATIO SHALL BE CONSIDERED.

There are three categories: liquidity, solvency, and profitability.
Describe what each category tells the user about the financial
health of a company.
Choose three ratios in each category and describe what the
ratios tell the user about the company. How are the financial
ratios used to evaluate a company.
Discuss what the numbers would be compared against for
analysis
Calculate each ratio for your companies. What do the ratios
tell you about each of your companies

Match each of the following ratios with the appropriate ratio
class (liquidity ratio, profitability ratio or solvency ratio)
Question 28 options:
123
Current ratio
123
Earnings per share
123
Quick ratio
123
Working capital
123
Asset turnover
123
Solvency ratio
1.
Liquidity ratio
2.
Profitability ratio
3.
Solvency ratio

Liquidity
Ratios:
- Working Capital:
$234,379
- Current Ratio:
1.34
- Inventory Turnover: 13.88
times
Solvency
Ratios:
- Debt to Asset Ratio:
75%
- Times Interest Earned:
2656
Profitability
Ratios:
- Gross Profit Rate:
50%
- Profit Margin:
17.7%
What accounting recommendations do you have for the new
company?
What business recommendations do you have to help the
new company?

Choose at least 2 Financial Ratios of happy valley nutrition
limited company . You can choose from Liquidity Ratios,
Profitability Ratios, Activity Turnover Ratios, Solvency Ratios,
and Cash Efficiency Ratios. calculate at least two years of same
ratio. please show them in the table.

1.
Define and describe ratio analysis.
2. Explain how the liquidity, profitability, leverage, and
market ratios are used to analyze and compare financial
statements.

In which ratios would a potential long-term bond investor be
most interested? Explain.

What general conclusions can you draw about your company’s
liquidity, solvency and productivity based on your ratio
calculations.
Working Capital
2017 = $9,994 M
2016 = $10,673 M
Current Ratio
2017 = 1.51
2016 = 1.25
Quick Ratio
2016 = 1.12
2017 = 1.37
Liabilities to Equity
2016 = 3.33
2017= 3.61

5) What accounting term is used to describe stock
temporarily repurchased by a corporation? Under the
stimulus act why do you think corporations are not allowed to use
recovery money to repurchase their own stock? Do you
agree with this restriction? Why or why
not? If corporations repurchase their own stock, which
of the 3 categories of financial ratios (liquidity, solvency,
profitability),would be affected? Indicate whether the
category or categories would improve or deteriorate identifying
which ratios within each of the categories identified would be most...

why would a lender be interested in a firms liquidity ratios
what raitos would you be most interested in if you were planning
to invest in a firm?
why does the IRS allow firms to depreciate assets?
why do we use ratios to analyze and compare firms instead of
just comparing their balance sheets and income statements?

QUESTION 11
The debt-to-total assets ratio is primarily a measure of:
earnings-per-share
solvency
profitability
liquidity
QUESTION 12
Customer satisfaction would be found on:
the classified balance sheet.
not on any financial statement.
the multi-step income statement.
the statement of retained earnings
QUESTION 13
If total liabilities decreased by $25,000 and stockholders'
equity increased by $5,000 during a period of time, then total
assets must change by what amount and direction during that same
period?
$30,000 increase
$20,000 increase
$25,000 increase...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 50 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 3 hours ago

asked 4 hours ago

asked 4 hours ago