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After looking at the table, which shows the financial ratios of a particular company in 2020 compared to the industry average, explain what is the
After looking at the table, which shows the financial ratios of a particular company in 2020 compared to the industry average, explain what is the financial ratio or group of financial ratios that you need in the following cases and the decision that you might take in each of them
the following cases:
a. A company wants to buy 400,000 worth of raw materials from you, to be paid after a period of 90 days.
B. The company would like to borrow from you as a bank an amount of 5 million for a period of 10 years at the prevailing market interest rate of 8%, and to use this money to pay off its other short-term loans to the bank.
C. The company has 150,000 shares outstanding, and the stock sells for 45 in the market. The company is offering you an additional 60,000 shares at the market price.
Some financing ratios of the company with the industrial sector | ||
average of the industry | 2020 | financing ratios |
2.24times | 1.18 | current ratio |
1.5 times | 0.37 | quick ratio |
20 days | 61.7 | Accounts Receivable Turnover Rate |
3.5 times | 3.5 | Inventory turnover |
1.8 times | 1.85 | Fixed asset turnover |
35% | 67.5 | Debt to Total Assets Ratio |
5.3 times | 15.57 | The number of times the dividend covers the interest |
8% | 30.4 | Profit Margin Ratio |
7% | 34.5 | rate of return on assets |
17% | 106.5 | rate of return on equity |
3.8 OR | 4.62 | profit share |
7.6 times | 0.23 | Share price-earnings ratio |
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