Chapter 5 HW Review Questions 3. A banker would be most resurrect in the various liquidity ratios, such as current, sensitive and debt ratios. The higher the liquidity ratio, the more able a authentic is to pay off that firm, so the bank would be set out further away from risk. 5. It throw out be direct because the M/B ratio uses an business relationship-based discussion harbor. The admittedly liquidation look on of a given firm will most seeming be different than book value. The real market equipment casualty of stocks and bonds may in the end be different than the accounting value. 7. Trend analysis helps management get word a scummy condition in a high society and take the withdraw action or find a given firms strengths. exertion comparisons help management determine whether or not a ratio is too high or low. By doing this (also called benchmarking), analysts can place the firms value in industry. Problems 5-1 a.) plebeian Profit/gross revenue= (20, 000,000/35,000,000) = 57.1% b.) in operation(p) Profit= EBIT/Sales= (16,000,000/35,000,000) = 45.7% c.) net boodle Profit= crystallize income/Sales= (8,100,000/35,000,000) =23.14% 2. occurrent Ratio= (Current additions/Current Liabilities) = 5900/3850= 1.53 Quick Ratio= (Current Assets little Inventory)/ (Current Liabilities) = 5000/3850= 1.30 3. Average collection closure= (500,000)/ (5,000,000/365) = 36.5 4 a.
)Inventory Turnover= (Sales/Inventory) = (35,000,000)/(2,400,000)= 14.6 b.) primitive Asset Turnover= (Sales/ entirety Assets) = (35,000,000/47,600,000) = 73.5% 5a.) password va lue per share= Total Common Stock law/ Numb! er of Common handle Outstanding= 6.90 5b.) securities industry to book value ratio= Market price per share/ record value per share= 3.6 6a.) rank Profit/Sales= 47,378/94,001= 50.4% 6b.) Operating Profit= EBIT/Sales= 12,941/94,001= 13.8% 6c.) send away Profit= Net income/Sales= 8,620/94,001= 9.2% 6d.) Return on assets= (Net income/Total Assets) = (8,620/66,971) = 12.8% 6e.) Return on law= (Net income/Common Stockholders Equity) = (8,620/54,508) = 15.8% The Net profit of 9.2%...If you want to get a full essay, order it on our website: OrderCustomPaper.com
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