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FINANCIAL MANAGEMENT 1. What question are the two liquidity ratios designed to answer? 2. If one firm is growing rapidly and another is not, how
FINANCIAL MANAGEMENT
1. What question are the two liquidity ratios designed to answer?
2. If one firm is growing rapidly and another is not, how might this distort a comparison of their inventory turnover ratios?
3. If you wanted to evaluate a firms DSO, with what could you compare it? Explain how will you compare and do the analysis?
4. How does the decision to use debt involve a risk-versus-return trade-off (i.e. the benefits and risk implications of using debt financing)?
5. What factors impact the firm's Profit Margin (PM)? Explain in detail.
6. What does the price/earnings (P/E) ratio show? If one firms P/E ratio is lower than that of the other, what factors might explain the difference?
7. Why are comparative ratio analyses useful?
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