Question

The following is true for a publicly-traded company for the past three years.

• Revenues are increasing by an average of 4% per year

• Gross margins have been fairly flat, averaging 20.2% over the past 3 years

• The current ratio is shown below.

Year	2017	2018	2019
Current Ratio	1.0	1.2	1.4

1. Based on this limited information. Do you believe the firm is financially well- managed? Why or why not?

Answer 1

The given data shown that the revenue is increasing continuously year on year that shows that company is aquiring new business every year and the gross margin is falt that shows that the company is maintaining it's constant margin as there is increase in business. hence, constant gross margins will also increase at the cagr of 4% . The current ratio is increasing year on year and the current ratio is higher the better the company has current ration of 1.4 in 2019 it shows that company has more number of current assets then liabilities which is good for the company. This all data shows that the company is well well managed and financially strong.