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Required: Analyse the scenarios below and provide brief explanation for your analysis. 1. In year 2020, The Home Depot's cash ratio was 0.22. The Home Depot's cash ratio indicates that the company has on hand 22 cents of cash for each of RM1.00 of current liabilities. Would analysts be concerned about this number? to-equity ratio was

Required: Analyse the scenarios below and provide brief explanation for your analysis. 1. In year 2020, The Home Depot's cash ratio was 0.22. The Home Depot's cash ratio indicates that the company has on hand 22 cents of cash for each of RM1.00 of current liabilities. Would analysts be concerned about this number? to-equity ratio was

FINANCIAL ACCOUNTING
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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Conducting financial statement analysis using ratios and common size statements is as much of an art form as it is a science. These tools provide us with a quick way to skim the surface and identify areas that need to be explored in further detail. Required: Analyse the scenarios below and provide brief explanation for your analysis. 1. In year 2020, The Home Depot's cash ratio was 0.22. The Home Depot's cash ratio indicates that the company has on hand 22 cents of cash for each of RM1.00 of current liabilities. Would analysts be concerned about this number? 2. In year 2021, for each of stockholders' equity, Iskeya Berhad had RM29.63 of liabilities. Iskeya Berhad's debt-to-equity ratio was 8.92 in year 2020 and 5.65 in year 2019. How would you interpret this information? 3. CityMart paid dividends of RM3.56 per share in year 2021. At the end of year 2021, its stock price was RM207.23 per share. In recent years, the dividend yield for CityMart has been 2 percent or less. Would potential investor be interest to invest in CityMart? 4. Procter & Gamble, a manufacturing company, often has a current ratio less than one; its current ratio for year 2021 was 0.88. Why would a company's current ratio be low?
Transcribed Image Text:Conducting financial statement analysis using ratios and common size statements is as much of an art form as it is a science. These tools provide us with a quick way to skim the surface and identify areas that need to be explored in further detail. Required: Analyse the scenarios below and provide brief explanation for your analysis. 1. In year 2020, The Home Depot's cash ratio was 0.22. The Home Depot's cash ratio indicates that the company has on hand 22 cents of cash for each of RM1.00 of current liabilities. Would analysts be concerned about this number? 2. In year 2021, for each of stockholders' equity, Iskeya Berhad had RM29.63 of liabilities. Iskeya Berhad's debt-to-equity ratio was 8.92 in year 2020 and 5.65 in year 2019. How would you interpret this information? 3. CityMart paid dividends of RM3.56 per share in year 2021. At the end of year 2021, its stock price was RM207.23 per share. In recent years, the dividend yield for CityMart has been 2 percent or less. Would potential investor be interest to invest in CityMart? 4. Procter & Gamble, a manufacturing company, often has a current ratio less than one; its current ratio for year 2021 was 0.88. Why would a company's current ratio be low?
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