Question
In this discussion, you will analyze a company's performance by using specific ratios to help companies and investors in making the proper business and/or investment
In this discussion, you will analyze a company's performance by using specific ratios to help companies and investors in making the proper business and/or investment decisions. When evaluating a company, ratios will provide important clues to underlying conditions.
Scenario: Imagine you have passed your CPA and are now employed by a Fortune 500 company. Your boss tells you that as part of your new responsibilities you are to create pertinent ratios from the comparative financial statements. Address the checklist items based on the ratios below:
| Pertinent Ratios: | 2021 | 2022 |
| Current ratio | 4.3:1 | 3.4:1 |
| Acid-test ratio | 1.2:1 | 3.0:1 |
| Asset turnover | 3.8 times | 4.2 times |
| Net income | up 40% | down 8% |
| Earnings per share | $5.30 | $4.50 |
Checklist:
Explain what tools you would use to analyze the following data and why?
Discuss who would use this information.
Which data illustrates the firm's solvency?
Which data relates to the firm's going concern?
Discuss the usefulness as well as limitations of the data.
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Authors: Arup Nanda, Donald K Burleson
2nd Edition
0991638697, 978-0991638697
