Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Textbook Question
Chapter 3.8, Problem 3.18RQ
Financial ratio analysis is often divided into five areas: liquidity, activity, debt, profitability, and market ratios. Differentiate each of these areas of analysis from the others. Which is of greatest concern to creditors?
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Students have asked these similar questions
When analyzing financial statements, creditors are more concerned with which of the following?
a. Liquidity ratios
b. Solvency ratios
c. Profitability ratios
d. Both a and b
Ratios are used to analyze activities in the following areas:
a. asset management; liquidity; profitability; dividend use; debt management, market value
b. profitability; asset management; liquidity; debt management; growth, market value
c. asset management; liquidity; profitability; debt management, market value
d. asset utilization; liquidity; profitability; debt management; security analysis
Financial ratios can be divided into four categories, depending upon the purpose of the analysis. Discuss the four categories: internal liquidity, operating performance, risk analysis and growth analysis.
Chapter 3 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 3.1 - Prob. 3.1RQCh. 3.1 - Describe the purpose of each of the four major...Ch. 3.1 - Prob. 3.3RQCh. 3.1 - Prob. 3.4RQCh. 3.2 - With regard to financial ratio analysis, how do...Ch. 3.2 - What is the difference between cross-sectional and...Ch. 3.2 - Prob. 3.7RQCh. 3.2 - Prob. 3.8RQCh. 3.3 - Under what circumstances would the current ratio...Ch. 3.3 - In Table 3.5, most of the specific firms listed...
Ch. 3.4 - To assess the firms average collection period and...Ch. 3.5 - What is financial leverage?Ch. 3.5 - What ratio measures the firms degree of...Ch. 3.6 - What three ratios of profitability appear on a...Ch. 3.6 - Prob. 3.15RQCh. 3.6 - Prob. 3.16RQCh. 3.7 - What do the price/earnings (P/E) ratio and the...Ch. 3.8 - Financial ratio analysis is often divided into...Ch. 3.8 - Prob. 3.19RQCh. 3.8 - What three areas of analysis are combined in the...Ch. 3 - For the quarter ended January 28, 2017, Kroger...Ch. 3 - Learning Goals 3, 4, 5 ST3-1 Ratio formulas and...Ch. 3 - Prob. 3.2STPCh. 3 - Prob. 3.1WUECh. 3 - Learning Goal 1 E3-2 Explain why the income...Ch. 3 - Prob. 3.3WUECh. 3 - Learning Goal 3 E3-4 Bluestone Metals Inc. is a...Ch. 3 - Learning Goal 6 E3-5 If we know that a firm has a...Ch. 3 - Financial statement account identification Mark...Ch. 3 - Learning Goal 1 P3-2 1ncome statement preparation...Ch. 3 - Prob. 3.3PCh. 3 - Learning Goal 1 P3-4 Calculation of EPS and...Ch. 3 - Prob. 3.5PCh. 3 - Prob. 3.6PCh. 3 - Learning Goals 1 P3-7 Initial sale price of common...Ch. 3 - Prob. 3.8PCh. 3 - Learning Goal 1 P3-9 Changes In stockholders...Ch. 3 - Learning Goals 2, 3, 4, 5 P3-10 Ratio comparisons...Ch. 3 - Learning Goal 3 P3-11 Liquidity management Bauman...Ch. 3 - Prob. 3.12PCh. 3 - Inventory management Three companies that compete...Ch. 3 - Accounts receivable management The table below...Ch. 3 - Prob. 3.15PCh. 3 - Learning Goal 4 P3-16 Debt analysis Springfield...Ch. 3 - Prob. 3.17PCh. 3 - Learning Goals 2, 3, 4 P3-18 Using Tables 3.1,...Ch. 3 - Learning Goals 5 P3-19 Common-size statement...Ch. 3 - The relationship between financial leverage and...Ch. 3 - Learning Goal 4 P3-21 Analysis of debt ratios...Ch. 3 - Learning Goal 6 P3-22 Ratio proficiency McDougal...Ch. 3 - Learning Goal 6 P3-23 Cross-sectional ratio...Ch. 3 - Learning Goal 6 P3-24 Financial statement analysis...Ch. 3 - Learning Goals 6 P3- 25 Integrative: Complete...Ch. 3 - Learning Goal 6 P3-26 DuPont system of analysis...Ch. 3 - Learning Goal 6 P3-27 Complete ratio analysis,...Ch. 3 - Spreadsheet Exercise The income statement and...
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- Which of the following best describes the current ratio? a) Liquidity ratio b) Debt ratio c) Operating performance ratio d) Efficiency ratioarrow_forwardDebt-equity ratio is a sub-part of Select one: a. Liquidity ratio b. Solvency ratio c. Profitability ratio d. Efficiency ratioarrow_forwardWhich of the following ratios is most useful in evaluating solvency? a. Receivables turnover ratio. b. Inventory turnover ratio. c. Debt to equity ratio. d. Current ratio.arrow_forward
- Financial Ratios are grouped into five main categories: Liquidity ratios, Leverage ratios, Efficiency ratios, Profitability ratios and Market value ratios. Explanation and Examplesarrow_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 Accounts receivable turnoverarrow_forwardWhat is “benchmarking” and how is it used in financial ratio analysis? Provide an example.arrow_forward
- Financial ratio analysis is conducted by managers, equity investors, longterm creditors, and short-term creditors. What is the primary emphasis ofeach of these groups in evaluating ratios?arrow_forwardWho are the basic users of financial statements, and what are the financial ratios that are useful to them?arrow_forwardBusiness ratios of financial statements are generally categorized as one of the following areas, EXCEPT Select one: a. Leverage b. Profitability c. Net Present Value d. Liquidity e. Efficiency (or Activity)arrow_forward
- Define Balance sheet ratiosarrow_forwardWhat are the financial ratios used and what information do they provide?arrow_forwardTotal debt-to-assets ratio, debt-to-equity ratio and Long-term debt-to-capital ratio are examples of what type or category of ratios? a. Activity O b. Profitability O c. Liquidity O d. Leveragearrow_forward
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