FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
FINANCIAL ACCOUNTING:TOOLS FOR BUSINESS
19th Edition
ISBN: 9781119493624
Author: Kimmel
Publisher: WILEY
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Chapter 13, Problem 13.4EYCT

(a)

To determine

Financial ratios: Financial ratios are the metrics used to evaluate the liquidity, capabilities, profitability, and overall performance of a company.

Liquidity ratios: Liquidity ratios are used to measure the ability of the company towards fulfilling the obligations and requirements of the cash at the short-term.  Some of the ratios are current ratio, acid-test ratio, inventory turnover ratio, and accounts receivable ratio.

Solvency ratio: Next, solvency ratios are those ratios used to measure the ability of the company towards survival for a longer period.

Profitability ratio: Profitability ratios are those ratios used to measure the extent of income for particular time period.

To compute: Liquidity ratios for C Company and P Company

(b)

To determine

To compute: Solvency ratios for C Company and P Company

(c)

To determine

To compute: Profitability ratios for C Company and P Company

d)

To determine

Return on common stockholders’ equity ratio for C Company and P Company

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Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License