Question
Financial statement ratio analysis can reveal important insights about the position and performance of a firm. Provided below are key financial ratios for BlueScope Steel
Financial statement ratio analysis can reveal important insights about the position and performance of a firm. Provided below are key financial ratios for BlueScope Steel Ltd and United States Steel Corporation. Both firms are manufacturers of steel products with operations spanning a number of countries.
|
Ratio | BlueScope Steel Ltd | United States Steel Corporation | ||||
| 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | |
| Current Ratio | 1.59 | 1.62 | 1.76 | 1.82 | 1.63 | 1.87 |
| Quick/Acid Test Ratio | 0.8 | 0.79 | 0.88 | 0.85 | 0.92 | 0.85 |
| Total Debt/Equity | 0.19 | 0.18 | 0.16 | 1.3 | 0.92 | 1.17 |
| Inventory Turnover | 3.23 Times | 3.2 Times | 3.16 Times | 4.88 Times | 5.96 Times | 6.17 Times |
| Receivables Turnover | 7.93 Times | 7.92 Times | 7.64 Times | 6.52 Times | 8.27 Times | 8.37 Times |
Required:
- Discuss what the data in the table above reveals about the firms short-term liquidity, long-term solvency, and efficiency.
- Discuss how horizontal and vertical analysis could supplement the above analysis of the firms financial statement ratios.
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