21 Based on the following information from ABC Company's financial analysis, which one of the following statements is true? O Ratio Gross profit ratio Net profit ratio PP&E turnover ratio Current ratio Debt to equity Return on equity Year 1 35.7% 11.7% 14.2 5.4 1.5 12.6% Year 2 34.6% 12.5% 13.8 6.7 1.3 14.5% Year 3 36.9% 14.9% 4.9 6.1 0.8 14.1% Year 4 38.6% 15.1% 7.2 7.2 0.7 15.7% The company's ability to cover its short-term obligations is getting higher over the five years. The company might have invested too much PP&E in year 3. The company has increased operating expenses over the five years. The company's ability to cover its long-term debt is getting lower over the five years. Year 5 41.5% 18.3% 9.4 6.3 0.4 16.2%
21 Based on the following information from ABC Company's financial analysis, which one of the following statements is true? O Ratio Gross profit ratio Net profit ratio PP&E turnover ratio Current ratio Debt to equity Return on equity Year 1 35.7% 11.7% 14.2 5.4 1.5 12.6% Year 2 34.6% 12.5% 13.8 6.7 1.3 14.5% Year 3 36.9% 14.9% 4.9 6.1 0.8 14.1% Year 4 38.6% 15.1% 7.2 7.2 0.7 15.7% The company's ability to cover its short-term obligations is getting higher over the five years. The company might have invested too much PP&E in year 3. The company has increased operating expenses over the five years. The company's ability to cover its long-term debt is getting lower over the five years. Year 5 41.5% 18.3% 9.4 6.3 0.4 16.2%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Subject-account
Transcribed Image Text:21
Based on the following information from ABC Company's financial analysis, which one of the
following statements is true?
O
Ratio
Gross profit ratio
Net profit ratio
PP&E turnover ratio
Current ratio
Debt to equity
Return on equity
Year 1
35.7%
11.7%
14.2
5.4
1.5
12.6%
Year 2
34.6%
12.5%
13.8
6.7
1.3
14.5%
Year 3
36.9%
14.9%
4.9
6.1
0.8
14.1%
Year 4
38.6%
15.1%
7.2
7.2
0.7
15.7%
The company's ability to cover its short-term obligations is getting higher over the five years.
The company might have invested too much PP&E in year 3.
The company has increased operating expenses over the five years.
The company's ability to cover its long-term debt is getting lower over the five years.
Year 5
41.5%
18.3%
9.4
6.3
0.4
16.2%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education