Question
1.a) Why do ratios on their own not point to a companys weakness or strength? Use Liquidity as an example of how a combination of
1.a) Why do ratios on their own not point to a companys weakness or strength? Use Liquidity as an example of how a combination of ratios and other factors help you determine whether a companys liquidity is an issue or not.
b) You notice that a Companys inventory turnover ratio and accounts receivable turnover ratio have increased, what could be the different explanations if the Company has typically dealt with retail customers but now is looking to add wholesale customers?
c) It is often said: The Goal of the financial manager is to maximize stockholder value. What are the potential conflicts? And how can they be resolved? Is there perhaps a better goal?
d) Why is Debt/EBITDA (Cash Flow) a better ratio than Debt/Equity when measuring risk that leverage poses to a firm?
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