Question

in your own words, what does each measure that current ratio, debt to equity ratio and Return on equity ratio would tell us about your company that is important to investors and creditors?

Answer #1

- Current ratio is caluculated as current assets/ current liabilities.
- Debt Equity Ratio = Total outside Debt/ Equity funds
- Return on Equity = Total return ( Revenue) / Equity funds

**Interpretation
for one comany:**

- current ratio is tells about the company company liquidity position. current ratio falls below 1 it not good for the company. because the ratio says current laibilities more than current assets i.e. company may not pay their short term debts.
- debt equity ratio is 2 it is perfect mix of debt and equity of the comany. it varies from industry to industry. falls below the 2 it having more equity funds than debt funds it falls above 2 is debt is more than equity fundsi(i.e mix of debt equiy).falls above 2 it having more interest expenses revenue will be low.more equity funds means risk taken by shareholders is increses.
- return on equity shows the how much shareholders can earn from their investment noramlly it is greaterthan risk free investment.

long-term debt ratio = long-term debt/longterm debt + total
equity
Why this ratio might be of interest to investors or creditors,
what this ratio tells us and whether the company is performing
better or worse to the prior fiscal year. --> F18 = 42% , F19 =
40%

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The debt/equity ratio
is 1.2. The value of your company (debt + equity) is $6,000,000.
Your company wants to use CAPM to calculate the cost of equity.
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Multiple Choice
5.31%
9.47%
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7%
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Out of
current ratio
quick ratio
debt-to-equity ratio
rate-earned-on-stockholders'-equity ratio
rate-earned-on-total-assets ratio
1. Which ratio is most important to look at when potentially
investing in a company as a stockholder and why?
2. If you are a new supplier, which ratio would you be most
interested in to decide to sell your merchandise? Why? Assume your
terms for payment
are 2/10; net/30.
3. Assume you are a banker and a corporation has met with you to
borrow $100,000 and pay...

Out of current ratio, quick ratio, debt-to-equity ratio,
rate-earned-on-stockholders'-equity ratio,
rate-earned-on-total-assets ratio:
1. Which ratio is most important to look at when potentially
investing in a company as a stockholder and why?
2. If you are a new supplier, which ratio would you be most
interested in to decide to sell your merchandise? Why? Assume your
terms for payment are 2/10; net/30.
3. Assume you are a banker and a corporation has met with you to
borrow $100,000 and pay...

1) Company's Current ratio
2017 Current ratio = 2.055
2016 Current ratio = 2.077
Explain what information this ratio provides (define), and what
the results mean specifically to your
company. Use complete sentences in your own words.
Has the current ratio improved?_________________________
2) Company's Debt ratio
2017 Debt Ratio =0.417987 = 41.799%
2016 Debit Ratio = 0.415240 = 41.524%
Explain what information this ratio provides (define), and what
the results mean specifically to your
company Use complete sentences
Has the...

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