Introduction:The
The solvency ratios suggest the long-term solvency position of the business by taking into consideration the capital structure in which the finances have been employed. The same is determined through the debt-equity ratio and times interest earned.
The profitability ratios suggest the earning capacity of the business in terms of profit margin based on sales revenue and return on total assets based on total assets of the business.
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Classification of various ratios under Liquidity, Solvency, Profitability and Market prospects.
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FINANCIAL ACCT.FUND.(LOOSELEAF)
- Which of the following ratios is used to measure a firms profitability? a. Liabilities Ă· Equity c. Sales Ă· Assets b. Assets Ă· Equity d. Net Income Ă· Net Salesarrow_forwardMatch the ratio to the building block of financial statement analysis to which it best relates.A. Liquidity and efficiency B. Solvency C. Profitability D. Market prospects Book value per common sharearrow_forwardThe following financial statements apply to Finch Company: Revenues Expenses Cost of goods sold Selling expenses General and administrative expenses Interest expense Income tax expense Total expenses Net income Assets Current assets. Cash Marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Plant and equipment (net) Intangibles Total assets Liabilities and Stockholders' Equity Liabilities Current liabilities Accounts payable Other Total current liabilities Bonds payable Total liabilities Stockholders' equity Common stock (43,000 shares) Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Year 2 $219, 100 124,400 101, 100 19,700 17,700 10,000 9,000 1,700 1,700 20, 100 16,900 175,900 146,400 $ 43,200 $36,400 $ 4,800 $ 7,200 2,800 2,800 36,600 101,600 3,900 149,700 106,400 21,500 $277,600 $38,500 15,800 Year 1 $182, 800 54,300 64,300 118,600 114,900 44, 100 159,000 $277,600 31, 100 94, 100 2,900 138, 100 106,400 0…arrow_forward
- How to Compute the following ratios i. Gross Profit % ii. Operating profit % iii. Net Profit % iv. Current Ratio v. Acid Test Ratio vi. Cash Ratio vii. Cash Operating Cycle in days viii. Average Debt collection Period in days ix. Average Creditor Payment Period in days x. Average Stock Holding Period in days xi. Total liabilities to Total Equity Ratio xii. Interest Cover Ratio xiii. Return on Total Assets xiv. Return on Equityarrow_forwardUsing the information from 27A prepare the following ratios: gross profit margin profit margin return on assets earnings per share current ratio acid test ratio debt ratio Indicate what each is used for (ie: measuring efficiency, solvency etc)arrow_forwardDefine each of the following terms: a. Liquid asset b. Liquidity ratios: current ratio; quick ratio c. Asset management ratios: inventory turnover ratio d. Debt management ratios: total debt to total capital; times-interest-earned (TIE) ratio e. Profitability ratios: profit margin; return on total assets (ROA); return on common equity (ROE); return on invested capital (ROIC); basic earning power (BEP) ratio f. Market value ratios: price/earnings (P/E) ratio; market/book (M/B) ratio; enterprise value/EBITDA ratioarrow_forward
- KINDLY ANSWER PARTS IV & V FOLLOWED BY PART B.i,ii,iiiarrow_forwardABS GMA Ratio Analysis 2010 2009 2008 2007 2010 2009 2008 2007 Liquidity Management Working capital Current ratio Quick ratio 3,885.7 2,802.1 1,585.5 2.444.9 5,786.1 6,126.0 5,030.3 4,157.9 1.36 1.33 1.19 1.38 3.70 3.60 3.23 2.52 1.35 1.31 1.16 1.35 3.65 3.55 3.19 2.49 Asset Management AR Turnover ratio Average collection period Inventory Turnover ratio Inventory conversion period Asset Turnover ratio 1.06 1.05 1.05 1.00 1.03 1.08 0.96 1.00 344.71 346.70 349.28 365.00 352.77 338.15 380.43 365.00 90.62 65.15 59.07 55.99 43.78 44.20 50.07 50.79 4.03 5.60 6.18 6.52 8.34 8.26 7.29 7.19 0.75 0.65 0.66 0.66 0.92 0.89 0.87 0.87 Debt Management Times interest earned ratio Debt to equity ratio Equity multiplier 4.66 3.00 3.17 4.70 975.58 423.76 373.25 143.52 1.20 1.16 1.18 0.82 0.25 0.26 0.28 0.37 2.18 2.17 2.01 1.82 1.25 1.27 1.32 1.37arrow_forwardMatch the ratio to what it measures F. Current ratio Acid test ratio Working capital Accounts Receivable turnover - Days Sales Uncollected Inventory tunover Days Sales in Inventory - Debt ratio Equity ratio Debt-to-equity ratio Profit margin - Return on Total Assets - Return on Common Shareholder's Equity Price Earnings Ratio Dividend yield A. How quickly a company sells its inventory B. Whether the stock is a good value C. The cash return per share of stock D. How much of each sales dollar is profit E. How efficient the company is in collecting from its credit customers F. Ability to pay short-term debts G. How much of the company's assets are financed by creditors H. How much of the company's assets are financed by investors I. The extent a company is leveraged J. Return on investmentarrow_forward
- Question: Which financial ratio measures the proportion of net income generated per dollar of revenue? A) Return on Investment ( ROI) B) Operating Profit Margin C) Return on Sales (ROS) D) Earnings per Share (EPS)arrow_forwardtx Consolidated Statements of Income for Macy's Inc., Feb. 03, 2018-Feb. 02, 2019 (in millions, except per share data) Net sales Credit Card Revenues, Net Cost of Sales Selling, General, and Administrative Expenses Gains on Sale of Real Estate Restructuring, Impairment, Store Closing, and Other Costs Operating Income/Loss Benefit Plan Income Settlement Charges Interest Expense Gains (Losses) on Early Retirement of Debt Interest Income Income (loss) before Income Taxes Federal, State, and Local Income Tax Benefit (Expense) Net Income (Loss) Net Loss Attributed to Noncontrolling Interest Net Income Attributed to Macy's, Inc. Shareholders Basic Earnings per Share Attributable to Macy's, Inc. Shareholders Diluted Earnings per Share Attributable to Macy's, Inc. Shareholders Gamble7e_C01 Fi....pptx PS OLI Prev ww UM Saved 2019 $24,971 768 (15,215) (9,039) 389 (136) 1,738 39 (88) (261) (33) 25 1.420 (322) 1.098 10 $1.108 $3,60 $3.56 2018 $24.939 702 (15,181) (8,954) 544 Consolidated Balance…arrow_forwardMatch the ratio to the building block of financial statement analysis to which it best relates.A. Liquidity and efficiency B. Solvency C. Profitability D. Market prospects Times interest earnedarrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning