What do the liquidity ratios tell you in the financial analysis? 1. The capital structure of...
What do the liquidity ratios tell you in the financial analysis?
1. The capital structure of a company
2. The profitability of the company
3. The efficiency of inventory
4. The company’s ability to pay off debt obligations
5. Ratios analysis
Homework Answers
Liquidity ratios tell about the company's ability to pay off debt obligations.
It analyses the various current assets and liabilities of the company which can be converted to cash as and when needed.
It's an important consideration to creditors of the company, creditors look for liquidity ratio to determine the company's ability to pay off debt.
Add Answer to:
What do the liquidity ratios tell you in the financial
analysis?
1. The capital structure of...
What is the advantage of a variable-interest loan? 1. Protects the borrower from rising interest rates...
What is the advantage of a variable-interest loan? 1. Protects the borrower from rising interest rates 2 .Reduces the total interest payments 3. Protects the borrower from falling interest rates 4. Makes it easier for the borrower to plan for future payments. -------------------------------------------------------------------------- What does underwriting include in the general lending process? 1.Creating documentation for the borrower to sign 2.Assessing the borrower’s eligibility for the loan 3.Discussing loan amount and interest rate with the borrower 4. Monitoring loan account --------------------------------------------------------------------------...
How do you evaluate each of the four groups of financial ratios, including liquidity ratios, asset...
How do you evaluate each of the four groups of financial ratios, including liquidity ratios, asset efficiency (asset management) ratios, capital structure (solvency) ratios, profitability ratios, and market value ratios? Use examples to describe formulas, explain calculation steps and sources of data (input from which financial statement—income statement or balance sheet), and state final answers.
Discuss what each of the following ratios can tell you about a company’s financial results. 1)Profit...
Discuss what each of the following ratios can tell you about a company’s financial results. 1)Profit Margin 2) Capital Asset Turnover 3) Quick Ratio 4) Times Interest Earned How much information do the ratios alone give you? What should the ratios be benchmarked against? What are the limitations of ratio analysis?
Ratio Analysis
Most decision makers and analysts use five groups of ratios to examine the different aspects of a company’s performance. Indicate whether each of the following statements regarding financial ratios is true or false.StatementTrueFalseA company exhibiting a high liquidity ratio is likely to have enough resources to pay off its short-term obligations.Asset management or activity ratios provide insights into management’s efficiency in using a firm’s working capital and long-term assets.Debt or financial leverage ratios help analysts...
What is the debt ratio in the below problem? 4.0 Liquidity, acid test and debt ratios...
What is the debt ratio in the below problem? 4.0 Liquidity, acid test and debt ratios The person in charge of the finances of the company MGT, S.A. wants to know the company's situation concerning the industrial sector to which it belongs. For this, it has the following information regarding the industry: General liquidity ratio is 1.55; the acid test is 1.20, and the ratio between the available and the current liabilities is 0.95. The debt ratio stands at 1.25....
There are several groups of ratios most decision makers and analysts use to examine different aspects...
There are several groups of ratios most decision makers and analysts use to examine different aspects of a company's performance. Based on the descriptions of ratios listed, identify the relevant category of ratios. • Ratios that help determine whether a company can access its cash and pay its short-term obligations are called liquidity ratios. • Ratios that help determine the efficiency with which a company manages its day-to-day tasks and assets are called ratios. profitability market-value or market-based dividend policy...
Which of the following is an advantage of using equity as a source of funding? 1....
Which of the following is an advantage of using equity as a source of funding? 1. It won’t dilute existing shareholder’s value of change ownership percentage. 2. The cost of equity is usually lower than the cost of credit. 3. It doesn't have additional financial commitments. 4. It’s very liquid and always accepted. -------------------------------------------------------------------------- If you borrow $5,000 with 4% interest compounded annually, how much total interest do you need to pay after 2 years? 1 400 2. 404 3....
Do part of the financial analysis project. Using the correct financial ratios evaluate the company with...
Do part of the financial analysis project. Using the correct financial ratios evaluate the company with regard to its short-term liquidity, long-term solvency and profitability. See pages 604 and 605 for which financial ratios should be used to evaluate each category. Your evaluation declare whether Key Tronic is: strong, above average, average, below average, weak, for each short-term liquidity, long-term solvency and profitability. Be sure to mention the financial ratio you are looking at in making this determination and it...
5. Profitability ratios Profitability ratios help in the analysis of the combined impact of liquidity ratios,...
5. Profitability ratios Profitability ratios help in the analysis of the combined impact of liquidity ratios, asset management ratios, and debt management ratios on the operating performance of a firm. Your boss has asked you to calculate the profitability ratios of Petroxy Oil Co. and make comments on its second-year performance as compared to its first-year performance. The following shows Petroxy Oil Co.'s income statement for the last two years. The company had assets of $11,750 million in the first...
"The Balance Sheet, Ratio Analysis and the Financial Analyst" Many financial ratios can be utilized to...
"The Balance Sheet, Ratio Analysis and the Financial Analyst" Many financial ratios can be utilized to analyze financial statements. These fall into four (4) primary categories. Many financial analysts tend to utilize one (1) or two (2) of the following ratio categories when evaluating a company: Liquidity Ratios Activity Ratios Profitability Ratios Coverage Ratios Imagine that you are a financial analyst. Discuss the ratios you would most likely focus on when you conduct your analyses. Provide a rationale for your...
There are several groups of ratios most decision makers and analysts use to examine different aspects of a company's performance. Based on the descriptions of ratios listed, identify the relevant category of ratios. • Ratios that help determine whether a company can access its cash and pay its short-term obligations are called liquidity ratios. • Ratios that help determine the efficiency with which a company manages its day-to-day tasks and assets are called ratios. profitability market-value or market-based dividend policy...
Do part of the financial analysis project. Using the correct financial ratios evaluate the company with regard to its short-term liquidity, long-term solvency and profitability. See pages 604 and 605 for which financial ratios should be used to evaluate each category. Your evaluation declare whether Key Tronic is: strong, above average, average, below average, weak, for each short-term liquidity, long-term solvency and profitability. Be sure to mention the financial ratio you are looking at in making this determination and it...
5. Profitability ratios Profitability ratios help in the analysis of the combined impact of liquidity ratios, asset management ratios, and debt management ratios on the operating performance of a firm. Your boss has asked you to calculate the profitability ratios of Petroxy Oil Co. and make comments on its second-year performance as compared to its first-year performance. The following shows Petroxy Oil Co.'s income statement for the last two years. The company had assets of $11,750 million in the first...
Most questions answered within 3 hours.
-
What is meant by a “term premium”?
What can explain such a premium? Is it a...
asked 26 minutes ago -
23. Which molecule has only covalent bonds? A. CO2 B. Al2O3 C.
Mg3N2
24. The octet...
asked 51 minutes ago -
the
total pressure for a mixture of N2O4 and NO2 is 2.20 atm. If Kp=
7.10...
asked 54 minutes ago -
Delaware Corp. prepared a master budget that included $22,385
for direct materials, $28,600 for direct labor,...
asked 51 minutes ago -
For pesticide HCB (hexachlorobenzene), its logarithmic partition
coefficient log Kow is 5.6. What would be the...
asked 54 minutes ago -
A chemist requires 0.422 mil Na2CO3 for a reaction. How many
grams does this correspond to?
asked 58 minutes ago -
If the vapor pressure of carvone is approximately 9.4 torr at 99
°C, approximately how much...
asked 1 hour ago -
A juice bottling company is carrying out a test at 10%
significance that the mean population...
asked 1 hour ago -
What is the reflectivity (in percent) needed to keep water at a
temperature near its freezing...
asked 1 hour ago -
Suppose that the average surface temperature of Earth is 300K.
Assume this is uniform over its...
asked 1 hour ago -
Draw the condensed structural formula for alkenes and alkynes or
the line-angle structural formula for cycloalkenes...
asked 1 hour ago -
M. Laing has suggested a new arrangement of the periodic table
(J.Chem.Ed.1989, 66,
746). Answer the following...
asked 1 hour ago