Problem #15-17 Year 3 Year 2 Year 1 Make sure you see how the years are charted Sales trend 128 115 100 Current ratio 2.5 2.3 2.2 Acid-test ratio 0.8 0.9 1.1 Accounts receiveable turnover 9.4 10.6 12.5 Inventory turnover 6.5 7.2 8 Dividend yield 7.10% 6.50% 5.80% Dividend payout ratio 40.00% 50.00% 60.00% Return on total assets 12.50% 11.00% 9.50% Return on equity 14.00% 10.00% 7.80% Dividends paid per share $1.50 $1.50 $1.50 A Is it becoming easier for the company to pay its bills as they come due? Look at the Acid Test Ratio B Are customers paying their accounts at least as fast now as they were in Year 1? Look at the A/R turnover C Is the total of the accounts receivable increasing, decreasing, or remaining constant? Look at A/R turnover and sales D Is the level of inventory increasing, decreasing, or remaining constant? Look at inventory turnover and sales E Is the market price of the company’s stock going up or down? look at dividends per share and dividend yield; must know the inputs of formula for market price F Is the earnings per share increasing or decreasing? must know the inputs of the formula G Is the price-earning ratio going up or down? must know the inputs of the formula
Problem #15-17 Year 3 Year 2 Year 1 Make sure you see how the years are charted Sales trend 128 115 100 Current ratio 2.5 2.3 2.2 Acid-test ratio 0.8 0.9 1.1 Accounts receiveable turnover 9.4 10.6 12.5 Inventory turnover 6.5 7.2 8 Dividend yield 7.10% 6.50% 5.80% Dividend payout ratio 40.00% 50.00% 60.00% Return on total assets 12.50% 11.00% 9.50% Return on equity 14.00% 10.00% 7.80% Dividends paid per share $1.50 $1.50 $1.50 A Is it becoming easier for the company to pay its bills as they come due? Look at the Acid Test Ratio B Are customers paying their accounts at least as fast now as they were in Year 1? Look at the A/R turnover C Is the total of the accounts receivable increasing, decreasing, or remaining constant? Look at A/R turnover and sales D Is the level of inventory increasing, decreasing, or remaining constant? Look at inventory turnover and sales E Is the market price of the company’s stock going up or down? look at dividends per share and dividend yield; must know the inputs of formula for market price F Is the earnings per share increasing or decreasing? must know the inputs of the formula G Is the price-earning ratio going up or down? must know the inputs of the formula
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Problem #15-17 | |||||||||
Year 3 | Year 2 | Year 1 |
Make sure you see how the years are charted
|
||||||
Sales trend | 128 | 115 | 100 | ||||||
2.5 | 2.3 | 2.2 | |||||||
Acid-test ratio | 0.8 | 0.9 | 1.1 | ||||||
Accounts receiveable turnover | 9.4 | 10.6 | 12.5 | ||||||
Inventory turnover | 6.5 | 7.2 | 8 | ||||||
Dividend yield | 7.10% | 6.50% | 5.80% | ||||||
Dividend payout ratio | 40.00% | 50.00% | 60.00% | ||||||
Return on total assets | 12.50% | 11.00% | 9.50% | ||||||
Return on equity | 14.00% | 10.00% | 7.80% | ||||||
Dividends paid per share | $1.50 | $1.50 | $1.50 | ||||||
A |
Is it becoming easier for the company to pay its bills as they come due?
|
Look at the Acid Test Ratio | |||||||
B |
Are customers paying their accounts at least as fast now as they were in Year 1?
|
Look at the A/R turnover | |||||||
C |
Is the total of the
|
Look at A/R turnover and sales | |||||||
D |
Is the level of inventory increasing, decreasing, or remaining constant?
|
Look at inventory turnover and sales
|
|||||||
E |
Is the market price of the company’s stock going up or down?
|
look at dividends per share and dividend yield; must know the inputs of formula for market price
|
|||||||
F |
Is the earnings per share increasing or decreasing?
|
must know the inputs of the formula
|
|||||||
G |
Is the price-earning ratio going up or down?
|
must know the inputs of the formula
|
|||||||
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