c)Based on the above information, indicate which of the following statements is most correct by placing the number in the marked square ->The company is collecting money effectively across the whole five-year periodThe company is collecting money more effectively towards the end of the five-year periodThe company is collecting money from receivables consistent with its credit terms across the whole five-year periodThe company is not effective in collecting cash from its receivables1234d)Based on the above information, indicate which of the following statements is most correct by placing the number in the marked square ->The cash cycle 2016 is longer than in 2017The cash cycle 2019 is 87 daysThe cash cycle in 2016 is 62 daysThe cash cycle 2018 is shorter than in 20161234e)Based on the above information, indicate which of the following statements is most correct by placing the number in the marked square ->The company is efficiently managing its paymentsThe company could improve its payment efficiency by decreasing the amount of days it takes to pay suppliersThe company could improve its payment efficiency by increasing the amount of days it takes to pay suppliersPayment efficiency has not improved across the five-year period1234f)Based on the above information, what would be the effect of a downwards revaluation of an asset on current year ROE? Indicate by placing the numberin the marked square->1A revaluation would increase the value of ROE2A revaluation would decrease the value of ROE3A revaluation would have no effect on ROE4The effect could not be determined 20152016201720182019Return on Assets5%3%4%2%5%Return on Equity2%-1%0%-3%0%Debt to Assets0.40x0.45x0.50x0.55x0.60xDays payables outstandingDays sales outstandingInventory turnover (days)15 days43 days25 days16 days42 days20 days17 days43 days30 days17 days50 days12 days17 days70 days10 daysurther notes:- The credit terms for the company's purchases are 30 days.- The credit terms offered by the company are 25 days.Based on the above information, indicate which of the following statements is most correct by placing the number in the marked square ->The company should issue shares to more investors to increase return on equity.The company could borrow more on the same terms as the existing debt to create more leverage and increase ROE.12The company could repay its existing debt to decrease leverage and increase ROE.The level of debt in the company is not related to the ROE or ROA of the company.34Based on the above information, indicate which of the following statements is most correct by placing the number in the marked square ->The level of debt in the company is not related to the ROE or ROA in the companyThe effect of debt on ROE is increasing in magnitude across the periodThe effect of debt on ROE is decreasing in magnitude across the periodThe effect of debt is constant on ROE across the period14

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2015 2016 2017 2018 2019 Return on Assets 5% 3% 4% 2% 5% Return on Equity 2% -1% 0% -3% 0% 0.55x 17 days 50 days 12 days Debt to Assets 0.40x 0.45x 0.50x 0.60x Days payables outstanding Days sales outstanding Inventory turnover (days) 15 days 43 days 25 days 16 days 42 days 20 days 17 days 43 days 17 days 70 days 10 days 30 days otes: edit terms for the company's purchases are 30 days. edit terms offered by the company are 25 days. Based on the above information, indicate which of the following statements is most correct by placing the number in the marked square -> The company should issue shares to more investors to increase return on equity. The company could borrow more on the same terms as the existing debt to create more leverage and increase ROE. The company could repay its existing debt to decrease leverage and increase ROE. The level of debt in the company is not related to the ROE or ROA of the company. 1 2 3 4

2015 2016 2017 2018 2019 Return on Assets 5% 3% 4% 2% 5% Return on Equity 2% -1% 0% -3% 0% 0.55x 17 days 50 days 12 days Debt to Assets 0.40x 0.45x 0.50x 0.60x Days payables outstanding Days sales outstanding Inventory turnover (days) 15 days 43 days 25 days 16 days 42 days 20 days 17 days 43 days 17 days 70 days 10 days 30 days otes: edit terms for the company's purchases are 30 days. edit terms offered by the company are 25 days. Based on the above information, indicate which of the following statements is most correct by placing the number in the marked square -> The company should issue shares to more investors to increase return on equity. The company could borrow more on the same terms as the existing debt to create more leverage and increase ROE. The company could repay its existing debt to decrease leverage and increase ROE. The level of debt in the company is not related to the ROE or ROA of the company. 1 2 3 4

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question 6 (this question has 2 parts) Gordon Industries Ltd has provided you with the following information: 2019 2020 2021 Debt to Equity 10.5% 23.4% 36.2% Gross Profit margin 30.2% 36.5% 35.3% Net profit margin 19.5% 17.6% 13% Return on Equity 15.1% 17.5% 16.2% Asset Turnover (times) 0.71 0.82 1.41 Return on Assets 13.8% 14.4% 18.3% Interest coverage ratio 4 times 3 times 2.5 times a) Advise Gordon Industries of the relationship between Return on Assets, Asset Turnover and Net Profit Margin. Comment on the profitability position of Gordon and any advice you consider relevant. b) Advise the shareholders of Gordon Industries on the financial structure of the company.
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2021 2020 2019 2018 2017 Current Ratio 0.95 times 1.3 times 1.1 times 1.2 times 1.3 times Days in Accounts Receivable 50 days 45 days 40 days 35 days 30 days Days in Inventory 38 days 28 days 21 days 23 days 25 days Return on Equity 20% 15% 20% 19% 18% Debt to Total Assets 55% 45% 37% 35% 35% Profit $300,000 $250,000 $270,000 $240,000 $220,000 Discuss the trend in Profitability.
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TABLE 7.7 Financlal projoctions for Prairie Home Stores, 2016-2021 (figures in millions) 2016 2017 2018 2019 2020 2021 Rapid-Growth Scenario Book valuo, start of year S80 $ 92 $105.8 $121.7 $139.9 $146.9 Earnings 12 13.8 15.9 18.3 21.0 22.0 14 14.7 Dividonds 12 13.8 15.9 18.3 7.0 7.4 Rotainod earnings Book value, and of yoar 92 105.8 121.7 139.9 146.9 154.3 Constant-Growth Scenario Book value, start of year $80 $84 $88.2 $92.6 $ 97.2 $102.1 Earnings 12 12.6 13.2 13.9 14.6 15.3 Dividonds 8. 8.4 8.8 9.3 9.7 10.2 Rotainod earnings 4 4.2 4.4 4.6 4.9 5.1 Book value, end of year 84 88.2 92.6 97.2 102.1 107.2 Notos: 1 Both panels assumo oarnings oqual to 15% of start-of-yoar book valuo. This proftability rato is constant. 2 Tho top panol assumos afl carnings aro reinvosted from 2016 to 2019. In 2020 and lator yoars, two-thirds of oarnings aro paid out as dividends and one-third roinvosted. 3. Tho botlom panel assumos two-thirds of oarnings aro paid out as dividends in all yoars. 4. Columna…
Based on the forecast how much additional financing is needed?