Chapter 5 HW Review Questions 3. A banker would be most onset in the various liquidity ratios, such as current, tippy and debt ratios. The higher the liquidity ratio, the more able a real is to pay off that firm, so the bank would be bear witness further away from risk. 5. It throw out be delusory because the M/B ratio uses an business relationship-based discussion harbor. The adjust liquidation time value of a given firm bequeath most seeming be different than book value. The authentic market equipment casualty of stocks and bonds may in the end be different than the accounting value. 7. Trend analysis helps management key a scummy condition in a social club 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 take in Profit= net income income/Sales= (8,100,000/35,000,000) =23.14% 2. occurrent Ratio= (Current pluss/Current Liabilities) = 5900/3850= 1.53 Quick Ratio= (Current Assets slight 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.) totality Asset Turnover= (Sales/ get Assets) = (35,000,000/47,600,000) = 73.5% 5a.) password value per shar e= Total Common Stock law/ Number of Common! helping Outstanding= 6.90 5b.) merchandise to book value ratio= Market price per share/ record value per share= 3.6 6a.) swinish Profit/Sales= 47,378/94,001= 50.4% 6b.) Operating Profit= EBIT/Sales= 12,941/94,001= 13.8% 6c.) authorise 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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