Based on the preceding information, your calculations, and your assumptions, which of the following statements can be included in your analysis report? Check all that apply. A plausible reason why Fuzzy Button Clothing Company's price-to-cash-flow ratio has decreased is that investors expect lower cash flow per share in the future. Fuzzy Button Clothing Company's ability to meet its debt obligations has improved since its debt-to-equity ratio decreased from 0.60 to 0.38. A decline in the inventory turnover ratio could likely be explained by operational difficulties that the company faced, which led to duplicate orders placed to vendors. A decline in the inventory turnover ratio can be explained by the new inventory management system that the company recently adopted, which led to more efficient inventory management.
Based on the preceding information, your calculations, and your assumptions, which of the following statements can be included in your analysis report? Check all that apply. A plausible reason why Fuzzy Button Clothing Company's price-to-cash-flow ratio has decreased is that investors expect lower cash flow per share in the future. Fuzzy Button Clothing Company's ability to meet its debt obligations has improved since its debt-to-equity ratio decreased from 0.60 to 0.38. A decline in the inventory turnover ratio could likely be explained by operational difficulties that the company faced, which led to duplicate orders placed to vendors. A decline in the inventory turnover ratio can be explained by the new inventory management system that the company recently adopted, which led to more efficient inventory management.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Suppose you are conducting an analysis of the financial performance of Fuzzy Button Clothing Company over the past three years.
The company did not issue new shares during these three years and has faced some operational difficulties. The company has thus pilot tested some
new forecasting strategies for better operations management. You have collected the company's relevant financial data, made reasonable assumptions
based on the information available, and calculated the following ratios.
Price-to-cash-flow
Inventory turnover
Debt-to-equity
Ratios Calculated
Year 1 Year 2
6.80 4.76
13.60
0.60
Year 3
3.81
10.88 8.70
0.48
0.38
Based on the preceding information, your calculations, and your assumptions, which of the following statements can be included in your analysis
report? Check all that apply.
A plausible reason why Fuzzy Button Clothing Company's price-to-cash-flow ratio has decreased is that investors expect lower cash flow
per share in the future.
Fuzzy Button Clothing Company's ability to meet its debt obligations has improved since its debt-to-equity ratio decreased from 0.60 to
0.38.
A decline in the inventory turnover ratio could likely be explained by operational difficulties that the company faced, which led to duplicate
orders placed to vendors.
A decline in the inventory turnover ratio can be explained by the new inventory management system that the company recently adopted,
which led to more efficient Inventory management.
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