Question

Which of the following does not indicate increasing overall liquidity? A) an increasing current ratio B) an increasing quick ratio C)an increasing cash flow liquidity ratio D) an increasing cash conversion cycle

**What is the relationship between the average collection
period and accounts receivable turnover?**

When average collection period
increases, the accounts receivable turnover decreases.

Both ratios are expressed in
number of days.

Both ratios are expressed in
number of times receivables are collected per year.

All of the above are
correct..

**A firm has the following financial data for a particular
fiscal year: Sales for the year $3,000 Some year-end balance sheet
figures: Cash $350 Accounts Receivable $750 Inventory $1,200 ------
Total Current Assets $2,300 Total Current Liabilities $1,500 The
firm’s current ratio, quick ratio, and average collection period
are (in order; use a 365-day year):**

1.53, 0.73, 91.25 days

0.73, 2.00, 75.00 days

1.53, 0.73, 146.00 days

0.73, 1.53, 146.00 days

**Why do firms use debt as part of their financing
strategy?**

Debt is a safer way to finance
the firm than equity

Debt financing results in lower
returns to equity

Debt financing is a way of
fooling creditors

Debt financing is cheaper than
equity financing

**In analyzing a debtor, a trade creditor is primarily
concerned with the debtor’s profitability.**

True

False

Answer #1

Answer D) an increasing cash conversion cycle

Explanation : current and quick ratio, cash flow ratio will increase the overall liquidity but cash conversation cycle do not increases the liquidity .It tells you the days to take investment into cash

Answer : when average collection period increases ,the accounts turnover ratio decreases

Explanation : collection period will reduces when turnover ratio decreased

Answer : 1.53, 0.73, 91.25 days

Explanation current ratio =2300/1500=1.53

Quick ratio =1100/1500=0.73

Collection period =365*750/3000=91.25 days

Answer :Debt financing is cheaper thany equity

Explanation : we have many reasons for debt is cheaper than equity 1)tax advantage 2) leverage increases

Answer :True

Explanation A creditor is primarily concerned with the profitability of debtors

Long-term debt ratio
0.1
Times interest earned
8.0
Current ratio
1.4
Quick ratio
1.0
Cash ratio
0.4
Inventory turnover
4.0
Average collection period
73
days
Use the above information from the tables to work out the
following missing entries, and then calculate the company’s return
on equity. Note: Turnover and the average collection period are
calculated using start-of-year, not average, values. (Enter
your answers in millions. Round intermediate calculations and final
answers to 2 decimal places.)
Long-term debt ratio
0.1...

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

Current Ratio= 2.33
Operating Profit Margin= 2.3%
Quick Ratio= 0.8488
Total Debt to Equity= 1.21
Inventory Turnover= 4.12
Return on Assets= 1%
Average Collection Period= 37.79 days
Return on Equity= 2.22%
Total Assets Turnover= 2.31
TIE= 1.46
Select two of the ratios you derived in Corrigan Corporation.
Without re-stating the formula itself, explain what the ratio means
in terms of the corporation’s financial health. The industry norms
are provided below to use as comparative information. Points will
be awarded based...

TRUE/FALSE
Simply calculating the various ratios tells everything you need
to know about a company.
You would expect a produce market to have a low inventory
turnover ratio.
The Acid Test Ratio uses only the most liquid current assets in
its calculation.
The Current Ratio uses only the most liquid current assets in
its calculation.
The Inventory Turnover Ratio indicates the number of times
Accounts Receivable are turned into cash during the period.
The Return on Sales Ratio indicates how...

Q9 to Q12- Write the formula for the following ratios and what
each ratio measures:
Return on equity (ROE)
Return on assets (ROA)
Gross profit
Gross margin
Profit margin (also called the “net profit margin”)
Asset turnover
Fixed-Asset Turnover
Inventory Turnover
Inventory Period (also called “days inventory
outstanding”)
Collection Period (also called “account receivable
period”)
Payables Period (also called “account payable period”)
Operating Cycle
Cash Conversion Cycle
Financial Leverage (also called “equity multiplier” )
Debt-to-assets ratio
Debt-to-equity ratio
Times interest...

Which ratios or numbers is it best to have the lower the
better?
Group of answer choices
debt to asset ratio, average collection period, & days in
inventory
debt to asset ratio, gross profit rate, & days in
inventory
debt to asset ratio, average collection period, & return on
assets
debt to asset ratio, accounts receivable turnover & days in
inventory

Liquidity Ratios XYZ's financial statements contain the
following information: Cash $311,900 Accounts receivable 669,900
Inventory 823,900 Marketable securities 103,900 Accounts payable
593,000 Accrued expenses 177,000 Long-term debt 1,010,000 Round
answers to two decimal places.
Required:
1. What is its current ratio?
2. What is its quick ratio?
3. What is its cash ratio?
4. Using the ratios computed above, answer the following
regarding NWA's liquidity.
NWA’s current ratio depends on how liquid NWA's _______ are. If
the ________ is slow...

using Walmarts most recent 10-k report, please add an analysis
for the Liquidity Ratio ( A, B, C) (if you would do at least one or
of them id be grateful)
Compute and analyze the following groups of ratios for your
company and explain how they affect the investors’ or creditors’
decisions regarding the company in an essay(800 words or more (300
each part)). Please include an introduction sentence referencing
the sources of data for ratios. Provide a comparative analysis...

(Evaluating liquidity) The Tabor Sales Company had a gross
profit margin (gross profits ÷ sales) of 30.0 percent and sales
of $9.0 million last year. Seventy-five percent of the firm's
sales are on credit and the remainder are cash sales. Tabor's
current assets equal $1.5 million, its current liabilities equal
$300,000, and it has $100,000 in cash plus marketable
securities.
a. If Tabor's accounts receivable are $562,500, what is its
average collection period?
b. If Tabor reduces its average collection...

(Evaluating liquidity) The Tabor Sales Company had a gross
profit margin (gross profits divided by ÷sales) of 30.4 percent
and sales of $9.2 million last year. Seventy-five percent of the
firm's sales are on credit and the remainder are cash sales.
Tabor's current assets equal $2.1 million, its current
liabilities equal $319,000, and it has $99,000 in cash plus
marketable securities.
a. If Tabor's accounts receivable are $562,500, what is its
average collection period?
b. If Tabor reduces its average...

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