1.
Concept Introduction:
Debt ratio analysis: Debt ratio refers to the relation of all the debts of the company with the assets of the company. It shows the ability of the company to pay its debts in a good way i.e. it shows the solvency of the company.
The debt ratio of company A for the current and previous years both.
2.
Concept Introduction:
Debt ratio analysis: Debt ratio refers to the relation of all the debts of the company with the assets of the company. It shows the ability of the company to pay its debts in a good way i.e. it shows the solvency of the company.
The debt ratio of company G for the current and previous years both.
3.
Concept Introduction:
Debt ratio analysis: Debt ratio refers to the relation of all the debts of the company with the assets of the company. It shows the ability of the company to pay its debts in a good way i.e. it shows the solvency of the company.
The company with a higher leverage ratio for the current year.
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FINANCIAL+MANAG.ACCT.
- Do npt give image formatarrow_forwardPlease correct answer and don't use hand ratingarrow_forwardBased on these calculations, which company appears to be more risky and which company appears to be more profitable? How can you tell? (Keep in mind that the current ratio and debt to equity ratio are "risk ratios" and the gross profit ratio and return on equity ratio are "profitability ratios").arrow_forward
- REQUIRED Use the information provided in below to answer the following questions for the financial year ended 31 December 2023. Note: Answers to the ratios must be expressed to two decimal places. Comment on the management of debtors and creditors after calculating the relevant ratios. Determine the percentage of the profit after tax that has been retained by the company. Calculate the return on capital employed and comment on your answer. Would prospective lenders be concerned about the relative proportion of borrowed capital and own capital? Motivate your answer by calculating the relevant ratio. Calculate the ratio that measures the efficiency with which the non-current and current assets of company were managed. Comment on the ability of the company to settle its short-term debts under distress conditions. Use a relevant ratio to motivate your answer. INFORMATION The following information was obtained from the financial records of Fiona Limited:arrow_forwardSelected financial data for Bahama Bay and Caribbean Key are as follows:Required:1. Calculate the debt to equity ratio for Bahama Bay and Caribbean Key for the most recent year. Which company has the higher ratio?2. Calculate the return on assets for Bahama Bay and Caribbean Key. Which company appears more profitable?3. Calculate the times interest earned ratio for Bahama Bay and Caribbean Key. Which company is better able to meet interest payments as they become due?arrow_forwardUnder what situation will return on equity be higher than return on investment? a. When assets exceed liabilities. b. When the debt to equity ratio is greater than 1.0. c. When net income is higher than it was in the previous year. d. When a company earns more on borrowed money than the interest it must pay.arrow_forward
- Which of the following ratios helps in measuring the long term solvency of the company? Current ratio Debt equity ratio Net profit margin ratio Quick ratioarrow_forwardWhat do the following ratios reveal about the financial health of a company? And how do I calculate them? Long-Term Debt-paying Ability Debt Ratio Debt-equity Ratio Times Interest Earnedarrow_forwardCertain financial ratios for The Gap for its most recent year are given below, along with the average ratios for its industry. Based on those ratios, answer the following. 1) Does The Gap seem to prefer to finance its assets with debt or with equity? How can you tell? What percent of its assets are funded with debt? What percent of its assets are funded with equity? 2) A supplier to The Gap sells merchandise to The Gap and asks to be paid within 60 days. While any of The Gap’s financial ratios might be of interest to the supplier, which of the ratios listed below do you think would likely be the most important one to the supplier? Why? 3) Which of the ratios presented suggest that, compared to its industry, The Gap may have a problem controlling its operating expenses? How can you tell? Your answer should clearly indicate that you understand why the ratio that you chose answers this question. Here is the data for The Gap and its industry. Financial Ratios…arrow_forward
- Compare the performance of both companies with each other, for each of the calculated indicators and determine if it is necessary to make any adjustment or adjustments to better position the firm with the lowest performance, facing the end of the next fiscal year. Explain what adjustments you propose and why.arrow_forwardIf given the opportunity, in which of the firms would you invest based on the result of your analysis of both companies and the comparison with the industry? If you would not invest, explain your reasons according to the results obtained. Company Name: Year 2018 Chemicals and Allied Products Industry Ratios ………….. Solvency or Debt Ratios Merck J&J 2018 Debt ratio 0.67 0.61 0.47 Debt-to-equity ratio 0.93 0.51 0.38 Interest coverage ratio 12.27 18.91 -9.43 Liquidity Ratios Current ratio 1.17 1.47 3.47 Quick ratio 0.92 1.16 2.12 Cash ratio 0.40 0.63 2.24 Profitability Ratios Profit margin 14.64% 18.75% -93.4% ROE (Return on equity), after tax 23.03% 25.60% -248.5 ROA (Return on assets) 7.49% 10.00% -146.5 Gross margin 68.06% 66.79% 55.3% Operating margin (Return on sales) 19.62% 24.27%…arrow_forwardThe income statement of Small Town, Inc. is as shown below: Small Town, Inc. Comparative Income Statement Year Ended December 31, 2025 (In millions) Net Sales Cost of Goods Sold Gross Profit Operating Expenses: O A. 41.89% O B. 60.81% O C. 39.19% O D. 28.38% $ 7,400 2,900 4,500arrow_forward