TEST YOUR UNDERSTANDING A Review of Ratio Analysis Activity 10 ORACLE CORPORATION Eor the fiscal year ended Current ratio 5/31/97 5/31/99 1.79 5/31/98 1.74 (PAL/S) 1.70 (P/L/S) Debt ratio 0.491 0.492 0.488 (P/L/S) Return on sales 0.15 0.11 0.14 (P/L/S) Return on assets 0.18 0.14 0.18 Source: Disclosure, Inc, Compact D/SEC, 2000. 1. In the left-hand margin above, circle whether the ratio measures (P)rofitability, short-term (L)iquidity -- the ability to pay current debt, or long-term (S)ölvency - the ability to pay long-term debt. - 2. For each short-term liquidity ratio above, circle the ratio indicating the greatest ability to pay current liabilities for tho three years of information presented. This company appears to (have/ not have) the ability to pay current debt. 3. For cach long-term solvency ratio above, circle the ratio indicating the least amount of debt financing for the three years of information presented. This company relies more heavily on (debt / equity) to finance assets.

TEST YOUR UNDERSTANDING A Review of Ratio Analysis Activity 10 ORACLE CORPORATION Eor the fiscal year ended Current ratio 5/31/97 5/31/99 1.79 5/31/98 1.74 (PAL/S) 1.70 (P/L/S) Debt ratio 0.491 0.492 0.488 (P/L/S) Return on sales 0.15 0.11 0.14 (P/L/S) Return on assets 0.18 0.14 0.18 Source: Disclosure, Inc, Compact D/SEC, 2000. 1. In the left-hand margin above, circle whether the ratio measures (P)rofitability, short-term (L)iquidity -- the ability to pay current debt, or long-term (S)ölvency - the ability to pay long-term debt. - 2. For each short-term liquidity ratio above, circle the ratio indicating the greatest ability to pay current liabilities for tho three years of information presented. This company appears to (have/ not have) the ability to pay current debt. 3. For cach long-term solvency ratio above, circle the ratio indicating the least amount of debt financing for the three years of information presented. This company relies more heavily on (debt / equity) to finance assets.

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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