Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Penumbra, Inc. has applied for an expansion loan from its bank. The loan officer has asked for the following historical data: 2016 2017 2018 2019

image text in transcribed

Penumbra, Inc. has applied for an expansion loan from its bank. The loan officer has asked for the following historical data: 2016 2017 2018 2019 Inventory turnover 10 9 8.5 6 Profit margin 11.5% 12.1% 12.3% 12.6% Current ratio 1.1 1.2 1.0 1.1 Quick ratio 0.8 0.7 0.7 0.5 Total liabilities-to-equity 0.5 0.75 1.2 1.1 What tentative conclusions might a competent loan officer come to after reviewing the data? Select one: a. The profit margins are increasing but the steep decline in the quick ratio compared to the consistency of the current ratio is concerning. This may indicate inflated inventory values. b. The profit margin and total liabilities-to-equity ratios are improving. Solvency, in particular, improved substantially in 2018. C. Although the quick ratio is decreasing, that may simply be the result of decreasing inventory levels as seen by decreasing inventory turnover ratios. d. It appears that Penumbra might have acquired a significant amount of debt in 2018. e. A and B f. A and D g. B and C

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

Step: 3

blur-text-image

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

An Introduction To Financial Markets A Quantitative Approach

Authors: Paolo Brandimarte

1st Edition

1118014774, 9781118014776

More Books

Students also viewed these Finance questions

Question

What is the content-level meaning?

Answered: 1 week ago