Question 2Selected ratios of Company X are shown below:Inventory turnoverDays' sales uncollectedDays' purchases in accounts payableTotal asset turnoverEquity ratioTimes interest earned20215.332.421.02.60.8N.A.20207.118.320.02.50.8N.A.Using the financial ratios provided, analyse the performance of Company X in 2021compared to the previous year.

Ans. In general the performance of Company X is not good in 2021 when compared to its performance in…

Question 2 Selected ratios of Company X are shown below: Inventory turnover Days' sales uncollected Days' purchases in accounts payable Total asset turnover ratio Equity Times interest earned 2021 5.3 32.4 21.0 2.6 0.8 N.A. 2020 7.1 18.3 20.0 2.5 0.8 N.A. Using the financial ratios provided, analyse the performance of Company X in 2021 compared to the previous year.

Question 2 Selected ratios of Company X are shown below: Inventory turnover Days' sales uncollected Days' purchases in accounts payable Total asset turnover ratio Equity Times interest earned 2021 5.3 32.4 21.0 2.6 0.8 N.A. 2020 7.1 18.3 20.0 2.5 0.8 N.A. Using the financial ratios provided, analyse the performance of Company X in 2021 compared to the previous year.

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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Ratios Calculated Year 1 Year 2 3.64 +Q+ Price-to-cash-flow 5.20 Inventory turnover 10.40 Debt-to-equity 0.70 8.32 0.56 Year 3 2.91 6.66 0.45 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. Cold Goose Metal Works Inc.'s ability to meet its debt obligations has improved since its debt-to-equity ratio decreased from 0.70 to 0.45. 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. A decline in the debt-to-equity ratio implies a decline in the creditworthiness of the firm. A plausible reason why Cold Goose Metal Works Inc.'s price-to-cash-flow ratio has decreased is that investors expect lower cash flow per share in the future.