BUS-317 TOPIC 2 DQ 1

. Explain the factors used in the formula, how the ratio assists the investor in evaluating a company’s performance, and whether it assesses liquidity, solvency, or profitability.

Which one of the following is a measure of long term solvency? A. Price earning ratio B. Profit margin  C. Cash coverage ratio D. Receivables turnover E. Quick ratio

Liquidity Ratios: a. Measure the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash. b. Measure the ability of the company to survive over a long period of time. c. Measure the income or operating success of the company for a given period of time.

Financial ratios that measure a firm's ability to pay its bills over the short run without undue stress are known as ratios. asset management financial leverage liquidity profitability market value

When assessing a company’s Credit Risk, analysts use financial ratios to determine liquidity and solvency IS IT TRUE?

Discuss how a financial manager can use ‘current ratio’ and ‘debt ratio’ in ratio analysis to better manage a firm.

To evaluate a company’s performance, investors need a benchmark to which they can compare its financial ratios. What are some of the problems associated with these comparisons?

Which of the following statements is correct?   a. Any forecast of financial requirements involves determining how much money the firm will need and is obtained by adding together increases in assets and spontaneous liabilities and subtracting operating income.   b. The percentage of sales method of forecasting financial needs requires only a forecast of the firm's balance sheet. Although a forecasted income statement helps clarify the need, it is not essential to the percentage of sales method.   c. Because dividends are paid after taxes from retained earnings, dividends are not included in the percentage of sales method of forecasting.   d. Financing feedbacks describe the fact that interest must be paid on the debt used to help finance AFN and dividends must be paid on the shares issued to raise the equity part of the AFN. These payments would lower the net income and retained earnings shown in the projected financial statements.   e. All of the statements above are false.

1. What is an investor’s objective in financial statement analysis? a. To determine if the firm is risky b. To determine the stability of earnings. c. To determine changes necessary to improve future performance d. To determine whether or not an investment is warranted by estimating a company’s future earnings stream   2. The current ratio isa. calculated by dividing current liabilities by current assets. b. used to evaluate a company's liquidity and short-term debt paying ability c. used to evaluate a company's solvency and long-term debt paying ability. d. calculated by subtracting current liabilities from current assets.

Which of the following provides the best description of the liquidity ratios? Current ratio is the strictest test for a firm's liquidity position. If Firm A has higher values of all liquidity ratios than Firm B, and both firms are in the similar industry, then Firm A is managing its liquidity better than Firm B. The quick ratio regards inventory as part of the current assets because it's more liquid than other types of current assets. Cash ratio between 0 and 0.5 is considered a safe range for a firm's liquidity. 00

The debt ratio is used primarily as a measure of:     Short-term liquidity.     Profitability.     Creditors' long-term risk.     Return on Investment.

not use ai please

Describe why an Investor would use Profitability Ratio’s? What are the following ratio's measuring (i) Return on Assets, (ii) Return on Equity, (iii) Profit Margin. Describe why a CEO would use Activity Ratio’s? What are the following ratio’s measuring (i) Days Receivables Outstanding, (ii) Inventory Turnover. Describe why a Bank would use Solvency Ratio’s? What are the following ratio’s measuring (i) Current Ratio, (ii) Acid-Test, (iii) Debt Ratio, (iv) Debt to Equity Ratio, Times Interest Earned ratio

Liquidity ratios are   Question 1 options:   Important for a supplier extending credit   Used to determine how much debt and equity a company should have   Are important determinants of ROE   Are concerned with a company's ability to meet long-term obligations.

Why would an analyst prepare a common-sized balance sheet? a. To better understand growth rates b. To better understand profit margins c. To better understand leverage and liquidity issues d. Because he is getting paid by the hour

Ratios used to determine whether or not a company can survive over a long period of time are: Group of answer choices A)Liquidity ratios. b)Solvency ratios. c)Profitability ratios. d)Market indicators ratios. e)None of the above

Profitability ratios: measure the amount of debt the firm uses. measure how effectively a firm is managing its assets. show the relationship of a firms cash and other current assets to its current liabilities. show the combined effects of all areas of the firm on operating results.

In deciding the appropriate levelof current assets for the firm,management is confronted with   A. a trade-off between short-term versus long-term borrowing.B. a trade-off between profitability and risk.C. a trade-off between equity and debt.D. a trade-off between liquidity and marketability.

What is the correct option?

An investor worried about a company’s long-term solvency would most likely examine its:C . debt-to-equity ratio

How to calculate a company's financial liquidity, solvency, efficiency, profability and market perspective? Thank you.