Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Part A: 1. Explain how financial indicators related to liquidity, asset management, debt management, profitability, and market value can support decision-making by managers, shareholders,

image text in transcribed

Part A: 1. Explain how financial indicators related to liquidity, asset management, debt management, profitability, and market value can support decision-making by managers, shareholders, and commercial banks. 2. Explain the effect that the increase in the company's debts has on the Return on Assets (ROA) and Return on Equity (ROE) indicators. 3. Discuss how inventory and asset turnover analysis can help improve a company's operational performance. 4. Assuming that the fiscal health of the company Health Company is not optimal, explain how Return on Equity (ROE) can help justify the payment of dividends to shareholders and the increase in the company's debts. 5. If the Liver Corporation company has a lower price/earnings (P/E) indicator than another company that is engaged in the same activity, what reasons could explain these differences? 6. Describe at least three problems that arise in the analysis of financial indicators. 7. Explain how the DuPont equation can help analyze the company's results. Part B: 1. If the Baldwin Corporation company has $ 2 million of inventory, $ 5 million of total current assets, and $ 1.5 million of current liabilities, what will be the Current Ratio and the Quick Ratio, assuming the average of the industry is 4.3? 2. The Kairos Industries company achieved $17 million in sales and $3 million in net income. The value of the assets totaled $6 million, as did the equal parts of the liabilities plus equity. The company also paid taxes at 32% and interest at 6%. Determine the Net Profit Margin, Assets Turnover Ratio, ROA, ROE and Return on Invested Capital (ROIC).) 3. Liberty Solutions Inc. has annual sales of $125 million, inventory valued at $ 35 million, and $ 18 million in accounts receivable. Determine the Inventory Turnover Ratio (ITR) and the Days Sales Outstanding (DSO), assuming the industry average is 90 days. 4. The Renew Company has an earnings per share (EPS) of $ 3.50, a value per share of $ 35, and a market value of $ 36. Calculate the price / profit indicator (P/E).

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Financial Management

Authors: James R Mcguigan, R Charles Moyer, William J Kretlow

10th Edition

978-0324289114, 0324289111

More Books

Students also viewed these Finance questions

Question

If you do, how often do you do so, and if not, why not?

Answered: 1 week ago