You have just started your first job as a financial analyst for a large investment company. Your
Question:
You have just started your first job as a financial analyst for a large investment company. Your boss, a senior analyst, has finished a detailed report evaluating bonds issued by two different companies. She stopped by your desk and asked for help: "I have compared two ratios for the companies and found something interesting." She went on to explain that the financial leverage ratio for Applied Technologies Inc. is much lower than the industry average and that the one for Innovative Solutions Inc. is much higher. On the other hand, the times interest earned ratio for Applied Technologies is much higher than the industry average, and the ratio for Innovative Solutions is much lower. Your boss then asked you to think about what the ratios indicate about the two companies so that she could include the explanation in her report. How would you respond to your boss?
Step by Step Answer:
Financial Accounting
ISBN: 9780070001497
4th Canadian Edition
Authors: Patricia A. Libby, Daniel Short, George Kanaan, Maureen Libby Gowing, Robert Libby